Cleveland Fed’s Hammack supports keeping rates around current ‘barely restrictive’ level

Economic

Summary:

Nvidia’s blowout earnings and soaring AI demand sparked a broad U.S. market rally. Strong revenue, huge data-center growth, and massive hyperscaler spending boosted tech stocks and improved short-term bullish sentiment across sectors.

Cleveland Federal Reserve President Beth Hammack on Thursday gave indications that she thinks the central bank could be nearing the end of what could be a brief rate-cutting cycle.

The policymaker told CNBC that she thinks the current level of interest rates is “barely restrictive, if at all” when it comes to the economic impact.

Restrictiveness is a key metric for Fed officials, who are divided ideologically over whether labor market weakness or inflation is a bigger threat. Hammack has been more in the hawkish camp when it comes to inflation, preferring higher rates and more restrictive policy as a bulwark against another surge in prices.

“I think that we need to maintain a modestly, somewhat restrictive stance of policy to make sure that we are continuing to bring inflation back down to our 2% objective,” she told CNBC’s Steve Liesman on “Squawk on the Street.” “Right now, to me, monetary policy is barely restrictive, if at all, and I think we need to make sure that we’re maintaining that somewhat restrictive stance to bring monetary to bring in place.”

Hammack added that she thinks the current federal funds rate, targeted in a range between 3.75%-4%, is “right around a neutral rate,” indicating it does not need to come down much further.

As a voting member of the Federal Open Market Committee this year, Hammack serves as a key policy voice.

The Fed next meets Dec. 9-10, and market expectations have swung from a near-certainty that the committee would approve a third consecutive quarter percentage point reduction to now pricing in about a 60% probability that the committee will stand pat, per the CME Group’s FedWatch tracker of futures prices. Minutes from the October meeting, released Wednesday, detailed the sharp divide among committee members.

While focused on inflation, Hammack expressed concern over current price levels, noting that interviews she and her staff have conducted around the Cleveland area indicate labor market pressures as well as inflation concerns that are causing difficulty for households to make ends meet.

“What we hear from the workers is that they’re holding on to their jobs for dear life, if they have them,” she said. “We are in this slow, this low-hiring, low-firing environment. But what I also heard ... was that the money that they have coming in is just not stretching as far as it used to. What used to cost $30 now costs $5, and so ... that inflationary pressure is still very salient for them.”

Addressing the September nonfarm payrolls report released Thursday, Hammack called the picture “mixed” as it showed both higher-than-expected payrolls growth and a tick up in the unemployment rate.

Source: cnbc

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Commodity

Political

The Trump administration said it is seeing signs that its sanctions on major Russian oil producers are crimping the economic engine that has allowed Moscow to continue to fund its war in Ukraine.

Prices for Russian oil have plunged as major Indian and Chinese buyers moved to comply with the sanctions before the Friday deadline for companies and banks to wind down business with Russian oil giants Rosneft and Lukoil, a senior Treasury Department official told reporters on a briefing call. The official spoke on condition of anonymity to describe private conversations between the department and foreign buyers.

The official said the buyers have said they planned to cancel, pause or seek ways out of their forward purchases of Russian oil because of the sanctions announced in October.

The United States is promoting the penalties as President Donald Trump's envoy, Steve Witkoff, is trying to advance a plan aimed at ending the war. The plan calls for major concessions from Ukraine’s leadership on territory and weaponry, but it was not immediately clear what, if any, concessions have been asked of Russia.

The sanctions were intended to force Russian President Vladimir Putin to the negotiating table and bring an end to the war that began when Russia invaded in February 2022. U.S. officials on Thursday pointed to the price of key grades of Russian oil now selling at multiyear lows, citing publicly available data.

Officials also said they have seen significant outreach from foreign governments and the private sector for guidance on how best to sever their ties to Rosneft and Lukoil.

Ukraine's president, Volodymyr Zelenskyy, and bipartisan lawmakers had for months pressured Trump to impose harsher sanctions on Russia's oil industry.

Trump’s efforts to end the war have failed to gain traction. The Republican president has expressed frustration with Putin’s refusal to budge from his conditions for a settlement after Ukraine offered a ceasefire and direct peace talks.

Source: AP

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Stocks

Nvidia Earnings Ignite Broad Market Rally

Daily NVIDIA Corporation

U.S. equities are posting strong gains on Thursday as Nvidia’s standout quarterly results restore confidence in the AI trade and lift all major indexes.

Why is the stock market up today? Nvidia earnings boosts tech_2

Daily Nasdaq Composite Index (IXIC)

At 16:54 GMT, the S&P 500 is up 1.38% at 6,733.68, the Nasdaq has climbed 1.76% to 22,962.117, and the Dow Jones is higher by 1.15% at 46,669.98. Traders are treating Nvidia’s 62% year-over-year revenue surge to $57 billion as confirmation that enterprise and cloud spending on AI remains firmly intact.

Nvidia also topped earnings expectations with $1.30 per share versus projections of $1.26, while projecting fourth-quarter revenue of $65 billion plus or minus 2%, well above the $62 billion forecast. CEO Jensen Huang underscored continued strength in AI demand, noting that cloud GPUs are fully booked and Blackwell-related sales continue to expand rapidly.

How Strong Is AI Infrastructure Demand Right Now?

Nvidia’s data center revenue reached $51.2 billion, up 25% from last quarter and 66% from last year, reinforcing the scale of AI infrastructure spending by hyperscalers. Microsoft, Meta, Amazon and Google expect to commit more than $380 billion to AI infrastructure this year, with management teams across the group signalling continued investment rather than moderation.

During the earnings call, CFO Colette Kress highlighted practical returns from these deployments, noting Meta’s improved user engagement from AI recommendation engines, Anthropic’s expected $7 billion in annual revenue, and Salesforce’s 30% jump in engineering efficiency from AI-assisted coding. Traders see this as evidence that capital flowing into AI infrastructure is producing measurable payoffs.

Which Stocks Are Benefiting the Most?

Technology is leading sector performance with a 1.6% rise to 5,700.29. Nvidia shares are up 2.56% to $192.29, while Broadcom is gaining 4.77% and AMD is rebounding strongly. The enthusiasm extends to the “Magnificent Seven,” with Alphabet Class C up 3.31% and Tesla higher by 4.27%.

Gains are not limited to tech. Communication Services is advancing 1.95%, Energy is up 1.61%, and Consumer Discretionary is rising 1.51%.

Notable individual movers include Regeneron Pharmaceuticals, up 6.69%, and Diamondback Energy, gaining 3.62%, reinforcing the broad enthusiasm across sectors.

Is Market Sentiment Turning Toward Renewed Growth?

The strength of today’s rally reflects a clear shift in sentiment. Investors who had raised concerns about an AI bubble now appear more confident after Nvidia revealed $500 billion in GPU orders for 2025 and 2026, with Kress suggesting this total will increase further. Analysts note that these commitments reduce uncertainty around sustained demand through next year.

Short-Term Market Forecast

With hyperscalers maintaining aggressive investment plans, Nvidia delivering stronger-than-expected guidance, and sector gains broadening across the S&P 500, short-term sentiment leans bullish. Traders will watch for further confirmation in upcoming earnings reports, but today’s reaction suggests the market views AI spending as durable rather than overextended.

Source: fxempire

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Political

China–U.S. Trade War

U.S. officials are privately saying that they might not levy long-promised semiconductor tariffs soon, potentially delaying a centerpiece of President Donald Trump’s economic agenda.

Officials relayed these messages over the last several days to stakeholders in government and private industry, according to two people with direct knowledge of the matter and a third person briefed on the conversations.‌ A fourth person following the matter also said the administration was taking a more cautious approach to avoid provoking China. The discussions have not been previously reported.

Trump aides are taking their time on chip tariffs as ‌they work to avoid a rupture with Beijing over trade issues, which would risk a return to a tit-for-tat trade war and disruption of the flow of critical rare earth minerals, according to two of the people.

Those people cautioned that no decision is final until the administration signs off on it, and also said that triple-digit tariffs could be imposed at any time. The sources spoke anonymously in order to recount private conversations about policy deliberations.

Trump said in August that the United States would impose a tariff of about 100% ⁠on imports of semiconductors but exempted companies that are manufacturing ‌in the U.S. or have committed to do so. Privately, over the last several months, Washington officials had told people that the administration would roll out the tariffs soon. That guidance has now changed as the administration has continued to debate the ‍timing and other details.

A White House official and a Commerce Department official, asked about the discussions, disputed that the administration had adjusted its posture.

"That is not true," the White House official said, without specifying what was incorrect. "The administration remains committed to reshoring manufacturing that’s critical to our national and economic security." The Commerce official said, "There is no change in department policy regarding semiconductor 232 tariffs." Neither one specified how soon tariffs that have been threatened since the early days ‌of the Trump administration would be finalized, nor did they offer any other details.

TRUMP FACES PRESSURE ON CONSUMER PRICES

Any decision by the administration to slow down or narrow the scope of chip tariffs would come at a sensitive time for Trump. The Republican president is facing growing consumer angst over prices heading into the holiday shopping season.

Hiking taxes on imported semiconductors could raise consumer costs on the gadgets they power, from refrigerators to smartphones. Reuters reported in September that the Trump administration was looking at a plan that would also tax foreign electronic devices based on the number of chips in each one.

Trump rolled back tariffs on more than 200 food products last week, but he has ⁠also said that his import taxes have made no significant contribution to inflation. The U.S. government shutdown has delayed recent data on consumer prices, but inflation has been running above the Federal Reserve's target since former President Joe Biden held office.

Trump is also trying to maintain a delicate trade truce with China, a top manufacturer of both semiconductors and devices powered by them. Last month, Trump met Chinese President Xi Jinping in Busan, South Korea, ‍and reached an agreement to set aside their ⁠trade issues, for now.

During those conversations in Korea, U.S. officials nonetheless warned their Chinese counterparts that they could take national security steps in the coming months that Beijing might find objectionable, according to two people familiar with those conversations. Trump has bet that tariffs can revive domestic factory jobs ⁠lost over decades to countries including China.

In April, the Trump administration announced investigations into imports of pharmaceuticals and semiconductors as part of a bid to impose tariffs on them, arguing that extensive reliance on ‌their foreign production poses a national security threat.

Source: Reuters

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Cryptocurrency

The likelihood of bitcoin ending the year below $90,000 has risen to 50%, according to online options platform Derive.xyz, as traders ramped up hedging against more declines in the world's largest cryptocurrency.

On the other hand, the options market has assigned just a 30% chance of bitcoin finishing 2025 above $100,000.

Bitcoin was last down 4.2% at $86,681.41 on Thursday, after earlier falling to a ‌seven-month low. It rose to an all-time peak of $126,223.18 in early October. So far this year, bitcoin has fallen more than 7%, on track for an annual decline -- the ‌first since 2022.

Bitcoin has also dropped below its 50-day and 200-day moving averages and has fallen out of favor with trend-following investors, analysts said.

"The BTC price is currently very tenuous and skewed to the downside," said Sean Dawson, head of research at Derive.xyz in Canberra, Australia.

"Previous bull drivers like lowered rates ... have fizzled out, stalling upward price momentum. In other words, there's very little to be bullish about on the horizon."

Dawson estimated that over the last 30 days, crypto liquidations in both long and short positions totaled ⁠$8.25 billion.

SIZEABLE CONCENTRATION OF BITCOIN PUTS

One of the main catalysts for ‌the decline in bitcoin has been the less dovish stance of several Federal Reserve officials, who are advising caution on further interest rate cuts and citing still-too-high inflation. This has diminished expectations of a rate cut next month and has weighed on bitcoin and other risk assets such as stocks.

He ‍added that "a powderkeg of volatility in tech valuations" could see bitcoin sink to $75,000 before the end of the year, although prices should quickly rebound from that level.

Derive.xyz also pointed to a sizeable concentration of bitcoin "puts," about 13,800 contracts, conferring the right to sell bitcoin at a strike price of $85,000 at the December 26 expiry. A put option gives the holder the right, but not the obligation, to sell bitcoin at a set strike price.

The trade reflects demand for downside protection if bitcoin falls below $85,000.

To be sure, some market ‌participants believe a turnaround in bitcoin is not far behind.

Sean Farrell, head of digital asset strategy at Fundstrat, wrote in his latest note that the "near-term risk/reward now looks more balanced." He said that even if this proves to be an unsustainable turn, conditions are ripe for a sharp bounce in bitcoin.

Farrell said oversold signals are now starting to flash after bitcoin hit a seven-month low below $90,000, calling it a "potential value zone" that could attract buyers. He also said the latest selloff had cleared the market of last week's "forced and motivated sellers."

OPTIONS VOLATILITY SPIKES ACROSS THE BOARD

That said, other options indicators are flashing bearish signals.

Bitcoin's so-called call-put "skew" has taken a beating. The ⁠call-put skew, which reflects market sentiment, refers to the difference in implied volatility between calls, which are options to buy, and puts, which are options to sell. This skew shows a preponderance of puts over calls.

The 30-day put skew has further dropped from -2.9% to -5.3%, which means traders are increasingly paying up for downside insurance as prices continue to soften.

Options volatility across the board has also spiked, according to Derive.xyz's Dawson. Thirty-day implied volatility ‍has jumped from 41% to 49% in ⁠just two weeks and long-term volatility -- 180 days -- has increased to 49% from 46%.

This surge in volatility underscores the uncertainty surrounding bitcoin's trajectory, a point that resonates with some bearish voices in the market.

Jack Janasiewicz, portfolio manager and lead portfolio strategist at Natixis Investment Managers Solutions, said his bearish ⁠view rests on bitcoin's utility and mass adoption even as he acknowledged its increasing institutional acceptance.

"Can you really buy coke with bitcoin down the street? Sure you can allocate 1% or 2% of your portfolio to bitcoin ‌in case it goes to $1 million," he said.

But if it goes to zero, an allocation of 1%-2% is not a big loss,‌ he added.

Source: Reuters

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Commodity

Gold wavered as traders mulled the Federal Reserve’s interest-rate path following a key US jobs report that showed a mixed labor market.

US job growth picked up in September, though the unemployment rate ticked higher. It will be the last jobs report the Fed sees before its Dec. 9-10 meeting, and officials are divided over whether the slowdown in the labor market justifies another rate cut then.

Given that the data showed job growth topping expectations, “there is no reason to think the Fed is going to be more aggressive on easing monetary policy,” said Bart Melek, global head of commodity strategy at TD Securities. “The market was already thinking a December cut is not a sure bet. The jobs data just confirms this.”

Prior to the print, swap traders had already priced out a rate reduction next month following the government’s cancellation of the October employment report. While slightly increasing their wagers of a December cut after the jobs report, the traders still see a less than 50% chance of a rate reduction next month. Bullion typically underperforms in a higher rate environment.

Gold has rallied strongly this year, gaining more than 50% and hitting a record in October before retracing some of its gains. The advance has been supported by two earlier rate cuts from the Fed, as well as elevated central-bank buying and inflows into bullion-backed exchange-traded funds.

Gold slipped 0.2% to 4,070.34 an ounce at 11:21 a.m. in New York. The Bloomberg Dollar Spot Index was flat. Silver, platinum and palladium all fell.

Source: Bloomberg

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Economic

It marks a sharp rebound after job gains had slowed markedly earlier in the year. The three-month moving average fell to 29,000 following the August report.

More broadly, the picture is mixed. Revisions for the two previous months were negative (-33,000 jobs), while the unemployment rate ticked up slightly, from 4.3% to 4.4%.

On weekly jobless claims, filings came in at 220,000, versus an estimate of 227,000. However, continuing claims edged up to 1.97 million.

Shortly after the report, expectations for a December rate cut by the Fed rose somewhat, but remain in the minority (around 40%). A rate hold at the next Fed meeting also remains our preferred scenario.

Indeed, there is nothing in these figures to shift the Fed's members' positions: as the minutes showed, the Fed is divided.

In the minutes, it is written that many participants suggested that, given their economic projections, it would probably be desirable to keep rates unchanged for the rest of the year. Conversely, several participants judged that additional patience (...) would be appropriate in December if the economy evolves as they expect.

A tone suggesting the second camp is in the minority. Since that meeting, there has been more talk of a hold in December. Minneapolis Fed President Neel Kashkari even said he thought the October cut was not necessary.

The September employment report was, in any case, the last major data point before the December 9/10 meeting.

Indeed, the Bureau of Labor Statistics (BLS) said yesterday there would be no October employment report. Jobs created in October will be included in the November report. And that report will be published only on December 16, a week after the Fed meeting.

Retail sales and producer prices for September will be released on Tuesday. The JOLTS survey will be delayed to December 9, while the October survey is canceled.