December FOMC's biggest highlight: not just interest rate cuts, Powell may directly restart the $45 billion bond purchase plan
Hassett's statement: Unless a black swan event occurs, 2026 will be the 'golden year in American economic history', and he thinks 3% growth is too low, targeting 4%+.
Powell is very likely to take major action next Wednesday (December 10):
• 25bp interest rate cut (already 100% priced in)
• $45 billion short-term Treasury purchase plan (mini QE 2.0)
In a nutshell: QT (quantitative tightening) has quietly stopped as of October, the liquidity gap left must be filled, otherwise, the start of 2026 will stall.
Market reaction:
• U.S. stock futures up 0.4%, Nasdaq approaching a new high
• 10-year U.S. Treasury yield falls below 3.92%
Global ripples:
• Dollar index racing to 102, RMB under short-term pressure
• European Central Bank's rate cut probability soars
• Emerging markets have a brief celebration, but the specter of inflation has awakened
Ending in one sentence: Hassett is painting a rosy picture, Powell is pouring money, 2026 will either be truly golden or a big bubble - the answer will be revealed next Wednesday.
