'No Rate Cuts In Q1 2025,' Strategist Says After Fed's December Minutes

Minutes from the Federal Reserve's December meeting released on Wednesday show officials are uncertain about the path of future rate cuts, as President-elect Donald Trump's policies and how they could affect inflation remain unknown.

Expert Ideas: Jeffrey Roach, chief economist for LPL Financial, highlighted the Federal Reserve's use of the word "uncertain or a derivation thereof" 12 times throughout the official record from the Federal Open Market Committee and noted that participants find it increasingly difficult to map out a path for interest rates in the face of uncertainty. 

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Roach also pointed to "surprising" comments indicating Fed officials think "the strength of economic activity was unlikely to be a source of upward inflation pressures." 

He also referred to industry data that suggests hiring plans are softening and said markets could "get choppy" if Friday's payroll report surprises to the downside. 

Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report, projects the Fed to stay "on pause" for the next few meetings given ongoing sticky inflation and continued strength in the job market. 

However, he also said there is "possible risk to the upside at 5.00% for 10-year yields" if Friday's nonfarm payrolls report comes in above forecast. 

"Our view for investors is they should expect no rate cuts in Q1 2025 and 10-year US Treasury yields in the 4.50 to 5.00% range at least for the first quarter of 2025," Tentarelli wrote. 

Markets React: Markets are ended Wednesday mixed following the release of the Fed minutes. The Dow Jones Industrial Average was up 0.25% and the S&P 500, tracked by the SPDR S&P 500 ETF SPY also finished marginally higher on the session. The tech-heavy Nasdaq 100, tracked by the Invesco QQQ Trust QQQ, was down 0.06% at the closing bell. 

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Image created using artificial intelligence via Midjourney.