📈 Is The Fed Done Raising Rates?

Good morning. US stock futures rose in Wednesday morning trading as investors held out hope that the Federal Reserve is done raising benchmark interest rates.

🛍️ Fed officials see hold on interest rate increases

📝 Our report: Two Federal Reserve officials, once champions of the interest rate hiking bandwagon to rein in inflation, now seem to be leaning back, suggesting they might be fine with keeping rates on pause for a while. The last time policymakers released economic and rate path projections, at their September meeting, the majority of officials predicted one more rate increase would be necessary this year. 

 🔑 Key points:

• Governor Christopher Waller, one of the most hawkish Fed officials, said policy is well positioned to return inflation to the Fed’s 2% goal, suggesting policymakers may not need to raise rates again. Governor Michelle Bowman said she remains willing to support rate hikes if inflation progress stalls, but stopped short of endorsing an increase next month.

• Policymakers voted unanimously to keep interest rates unchanged in a range of 5.25% to 5.5% for a second straight meeting earlier this month.

• Recent economic reports have bolstered Fed watchers’ bets that the central bank is done raising rates and has pushed forward expectations for the first rate cut.

💡 So what: When the Federal Reserve holds interest rates steady, it implies that the central bank is maintaining its current monetary policy without any immediate changes in the cost of borrowing. In essence, the implications of maintaining the current interest rate depend on the economic context and the central bank's assessment of factors like inflation, employment, and overall economic growth. A steady stance is often seen as a balancing act to support economic objectives without causing disruptions.

Wednesday - US GDP, Fed Beige Book

Thursday - New York Fed President Williams Speaks, Initial Jobless Claims (wk end Nov 24)

Friday - Fed Chair Jerome Powell Speaks

 📈 Investing legend Charlie Munger passes at 99

💰 Understanding the technical world of hedging

⚡ Google works on clean energy

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🛑 Bank exec: New regulations could have broad implications

WHAT: Goldman Sachs' CEO David Solomon, is shaking his head at regulators, suggesting that their grand plans to make banks hold more capital won't turn the financial world into a fortress. Solomon said one area that would be impacted would be uncollateralized derivatives, which he said airlines often use to “hedge the price of jet fuel so they can have stability in their pricing.”

WHY: The proposed rules — which the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency unveiled in July — would require the biggest US banks to set aside more capital for a variety of different businesses.

🤖 Amazon builds own AI chip

WHAT: Amazon is unleashing a shiny new artificial intelligence chip for its cloud computing service, turning up the heat in its friendly rivalry with Microsoft to rule the roost in the kingdom of artificial intelligence. At a conference in Las Vegas, Amazon Web Services (AWS) Chief Executive Adam Selipsky announced Trainium2, the second generation of chip designed for training AI systems

WHY: The AWS move comes weeks after Microsoft announced its own AI chip called Maia. The Trainium2 chip will also compete against AI chips from Alphabet's Google, which has offered its Tensor Processing Unit (TPU) to its cloud computing customers since 2018.

🪙 “Big Three” finance organizations collaborate on “tokenisation”

WHAT: The International Monetary Fund, the World Bank, and the Bank for International Settlements are teaming up to embark on a grand adventure: they're about to turn some financial instruments into tokens. Their collaboration will initially focus on simple but still paper-based processes such as when richer countries donate into some of the World Bank's funds to support poorer parts of the world.

WHY: The trio will also work with Switzerland's central bank which has been pioneering tokenisation, the process of turning conventional assets into uniquely coded "tokens" that can be used in faster new systems.

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