November's inflation report threw the Fed a curveball: falling energy prices were countered by stubborn service and shelter costs, leaving core inflation stuck at 4%. Wage pressures keep the inflation fire smouldering, but a strong jobs report adds fuel to the economic growth engine. With mixed signals in hand, the central bank likely pauses, but the path forward remains shrouded in uncertainty. The next move hinges on whether the Fed prioritises taming inflation or keeping the economy floating. Investors and businesses hold their breath, waiting for tomorrow's FOMC announcement to clear the fog.

EQUITY

Wall Street surged on Tuesday, buoyed by easing inflation data that fuelled hopes for an early Fed pivot and reignited the tech rally. The Dow and S&P 500 notched fresh 52-week highs, while bets on a rate cut in May strengthened following the CPI report. However, energy stocks slumped as oil prices retreated on supply concerns, despite geopolitical tensions in the Middle East and US sanctions on Russia's war machine.

GOLD

Gold prices are subdued near their three-week lows and danced sideways as investors waltzed with uncertainty ahead of the Federal Reserve's rate decision. While a steady hand is expected, Jerome Powell's pronouncements could sway the market's dovish outlook, potentially sending gold tumbling.

OIL

The COP28 climate summit proposed a landmark deal urging nations to abandon fossil fuels, sparking oil price plunges as investors anticipate an impending energy transition. OPEC, wary of losing revenue, voiced strong opposition to the deal, while concerns over rising U.S. production and Fed hawkishness further pressured oil markets. Despite a potential inventory draw, demand worries linger, casting a shadow on oil's future as the world gears up for a cleaner energy landscape.

CURRENCY

The dollar edged higher Wednesday as investors awaited the Federal Reserve's verdict on rates. China's yuan weakened on softer intervention, while New Zealand's dollar slumped on softer inflation, while the euro and pound held ground. The ECB, BoE, Norges Bank, and SNB will all convene, with Norway divided on rate path and speculation swirling around the BoJ's exit from negative rates.