General Market Analysis – 3/12/25

US Stocks Push Higher on Fed Cut Bets – Nasdaq up 0.6%

US equities advanced overnight as investors continued to strongly price in a rate cut from the Federal Reserve next week. The Dow rose 0.39% to close at 47,474, the S&P 500 lifted 0.25% to 6,829, and the Nasdaq led the way again with a 0.59% gain to finish at 23,413. The US 2-year Treasury yield fell 2.2 basis points to 3.508%, while the 10-year benchmark held steady at 4.086%. The US dollar extended its recent declines against the majors, slipping 0.07% to 99.35 on the DXY. In commodities, oil prices weakened as uncertainty persisted around Russia–Ukraine peace discussions. Brent crude fell 1.25% to settle at $62.38, while WTI crude similarly dropped 1.25% to $58.58. Gold also moved lower, retreating 0.58% to $4,206.95 as profit-taking flows emerged following its strong performance in recent sessions.

Market Pricing in 25-Basis-Point Cut from Fed
Investors continue to strongly anticipate a 25-basis-point interest rate cut from the Federal Reserve at next week’s meeting. With Fed officials now in their pre-meeting blackout period, markets are trading heavily on expectations that we will see a cut from the Fed next Wednesday, with the short end of the yield curve close to annual lows. Pricing now sits around the 90% level that we will see 25 basis points, with a 66% chance that the rate will remain there in January, whilst a chance of 25% is being priced in that we see two rate cuts in the coming meetings. There now seems to be little room for more dovish surprises in the days ahead, and so traders feel that the risk sits with any corrections in the market, especially if data comes out on the hawkish side of expectations, with a particular focus on the Fed’s favoured inflation indicator, the Core PCE, due out on Friday.

Busy Day Ahead for Markets
Today’s economic calendar looks notably more active across all trading regions. In the Asian session, Australia will release its latest GDP data, with expectations for a 0.7% month-on-month increase priced in. The European session will see Switzerland publish CPI figures (exp -0.1% m/m), followed by remarks from ECB President Christine Lagarde later in the day. Attention then shifts to the US session, where several key indicators are due out, including the ADP Non-Farm Employment Change (exp 5K), the ISM Services PMI (exp 52.0), and weekly US crude oil inventory data (exp -1.9mio). These releases will be closely monitored for further signals on the strength of the US economy and the Fed’s policy trajectory.

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