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UBS strategists predict minimal change in the U.S. fiscal deficit under a second Trump administration, despite proposed tax cuts and spending programs. With the deficit exceeding 7.5% of GDP and a debt-to-GDP ratio over 120%, significant fiscal constraints are anticipated, including potential entitlement reforms and tax increases to stabilize the economy. The challenges of high interest rates and narrow congressional majorities may further complicate expansive fiscal policies.
UBS strategists predict minimal change in the U.S. fiscal deficit under a second Trump administration, despite proposed tax cuts and spending programs. With the deficit exceeding 7.5% of GDP and a debt-to-GDP ratio over 120%, significant fiscal constraints are expected, limiting expansive policies. Achieving long-term debt sustainability will likely require structural reforms, higher growth, and potential tax increases.
Bitcoin's price saw a modest recovery, circling $102,000 after a dip to $98,695, influenced by the Federal Reserve's cautious stance on interest rate cuts. While some traders remain optimistic about a potential recovery, others warn of a larger pullback in January, emphasizing the importance of holding above the $100,000 mark. The market remains volatile, with significant liquidations contributing to the choppy price action.
The Federal Reserve's future interest rate decisions will be driven by economic data, as highlighted in a UBS report. Key indicators, particularly the personal consumption expenditures (PCE) price index and jobs data, will significantly influence the central bank's policy direction. Despite a slower pace of rate cuts anticipated, the overall trend towards easing remains clear, providing clarity for investors in a resilient economic environment.
Recruitment challenges are easing, but specialized IT, engineering, and healthcare roles remain difficult to fill. Companies face pressure from a strong Swiss franc and uncertain business prospects, leading to restrained investment plans and moderate wage growth expectations. The Swiss National Bank's recent interest rate hike reflects these economic conditions, despite a mixed industrial landscape.
The Bank of England has maintained its interest rate at 4.75% as UK inflation reached an eight-month high of 2.6% in November, driven by rising transportation and housing costs. Despite some easing inflationary pressures, persistent inflation in the services sector remains a concern for the central bank.
Jerome Powell's recent statements following a modest 25 basis point interest rate hike have unsettled investors, as the Federal Reserve anticipates only two rate cuts next year due to persistent inflation concerns. The DAX is now in correction mode, with critical support at 20,000 points under threat, potentially leading to further declines towards the 19,703/19,681 range.
IG
The Federal Reserve's 0.25% interest rate cut triggered a swift liquidation of over $239 million in the crypto market, with Bitcoin briefly dipping below $100,000. Major cryptocurrencies, including Ethereum and XRP, also experienced significant declines, reflecting investor concerns about future rate cuts and inflation control. The overall market cap for meme coins fell nearly 8%, highlighting the widespread impact of the Fed's cautious stance.
The S&P 500 experienced its largest decline on record following a Federal Reserve decision on Wednesday. This significant drop highlights the market's reaction to monetary policy changes and investor sentiment in the wake of the announcement.
Bitcoin (BTC) is experiencing selling pressure ahead of the Federal Reserve's anticipated 0.25% interest rate cut, with current trading around $102,051.94. Despite this, strong buying activity suggests resilience, and traders are eyeing a CME futures gap near $102K as a potential buy-the-dip opportunity. A favorable FOMC outcome could reignite bullish momentum, shifting market sentiment towards a rally.
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