Morning Breakfast: Precious metals surge like a rainbow, crypto markets diverge, and the Federal Reserve decision is imminent as the market awaits signals

Market Overview

U.S. stocks showed mixed performance on Tuesday as investor sentiment grew cautious ahead of the Federal Reserve decision. The Dow Jones Industrial Average declined slightly by 0.38%, the S&P 500 fell by 0.09%, and the Nasdaq edged up by 0.13%. The China Golden Dragon Index underperformed, dropping by 1.37%. European markets all rose, with Germany’s DAX 30 up by 0.49%, while France’s CAC 40 and the UK FTSE 100 declined by 0.69% and 0.03%, respectively.

Precious Metals Break Key Levels, Silver Hits Record High

The precious metals sector led gains, with silver shining brightest, surging past the 60 level to 60.8 USD, setting a new all-time high. Pan-American Silver’s stock price jumped over 11%, and Americas Silver Corporation rose more than 7%. Gold also moved higher, up 0.39%, at 4206 USD per ounce, vying for the 4200 mark. This rally reflects investors’ adjusted expectations regarding monetary policy.

Crypto Market Continues Divergence, Bitcoin Rises, Ethereum Leads

The crypto sector continued its upward trend. Bitcoin rose for the third consecutive day, gaining 2.41% over 24 hours to currently trade at 87.72K USD. Ethereum performed even stronger, up 6.38% in 24 hours, now at 2.95K USD. Overall, the crypto market remains sensitive to Federal Reserve policy changes, with investors closely watching Powell’s signals tomorrow.

U.S. Stocks Fluctuate, JPMorgan Slumps on Spending Outlook

JPMorgan’s stock experienced volatility, rising 1.1% to 318.8 USD earlier in the day, approaching its all-time high of 322.25 USD, before sharply falling 4.8% to 300.02 USD, making it the worst performer among Dow components. The bank’s consumer banking chief warned that the consumer market is “somewhat fragile” and projected full-year spending of 105 billion USD, above the market consensus of 101 billion USD. Goldman Sachs gained 1.1%. Popular stocks such as Google, Broadcom, and Tesla rose over 1%, while Meta declined over 1%. Biotechnology and weight-loss drug sectors declined.

Pre-Fed Decision: Rate Cut Room and Political Independence Draw Attention

Potential Fed Chair candidate Harker indicated that there is more than 25 bps of rate cut room, fueling market speculation that Powell might adopt a “cut first, then set limits” strategy tomorrow, meaning a 25 bps cut followed by a statement signaling higher future policy thresholds. This approach is similar to the three consecutive rate cuts in 2019.

The world’s largest hedge fund, Man Group’s chief market strategist, pointed out that if the bond market questions the independence of the new Fed Chair, the central bank might be forced to shift toward quantitative easing (QE) to lower long-term borrowing costs. Bond investors are more focused on fiscal sustainability and central bank independence than on the fund rate level. This underscores the importance of the credibility of public officials.

Mixed Signals in Labor Market, Job Openings Surpass Expectations but Hiring Slows

U.S. job openings in October reached 7.67 million, slightly up from 7.66 million in the previous month, exceeding economists’ median forecast of 7.12 million and marking the highest in five months. However, simultaneous signs of reduced hiring and increased layoffs indicate ongoing labor market slowdown. The 10-year Treasury yield continued to rise to 4.19%, putting pressure on stocks. The MOVE and VIX fear indices rose for the second consecutive day.

Tech and Space Sectors Active

SpaceX is reportedly advancing its IPO plans, aiming to raise over 30 billion USD and seeking a total valuation of 1.5 trillion USD, with a potential listing as early as mid to late 2026. If successful, it would be the largest IPO ever. In less than six years, SpaceX’s valuation has grown over 22 times from 36 billion USD in March 2020, now surpassing Tesla.

Meta is developing new Llama successor models and cutting-edge AI models, codenamed “Avocado,” with release delayed from the end of the year to the first quarter of next year. Some internal Meta personnel are dissatisfied with the adoption of Llama architecture in China’s DeepSeek R1 model.

Market Highlights Summary

The US dollar index rose 0.15% to 99.24, USD/JPY increased 0.62%, and EUR/USD declined 0.09%. WTI crude oil fell 0.78% to 58.39 USD per barrel. Hong Kong Hang Seng Index futures closed at 25,399 points, down 35 points from yesterday’s close. The Federal Reserve FOMC will release the rate decision and economic outlook summary, followed by Powell’s monetary policy press conference, with markets awaiting policy direction.