Fed delivers expected 25bps cut as investors speculate a Santa rally 

We’re still a few days out from the “Santa rally window,” but a breakout in equities and crypto could be imminent

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


The FOMC today, as expected, lowered interest rates by 25 basis points. Committee members cited a commitment to achieving “maximum employment” and getting inflation closer to its 2% target as reasons for the decision. It’s the central bank’s third consecutive rate cut, but projections show committee members expect to slow their pace of decreases in 2025. 

Odds of another 25bps cut in January are now at 82%, according to data from CME Group. 

Committee member projections published Wednesday show the median interest rate target by the end of 2025 falling in the 3.75% — 4% range. This is 50bps higher than previous projections showed. 

The FOMC’s forward guidance (see what we did there) from this week’s meeting was mostly unchanged but a key phrase was added: “extent and timing.”

“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook and the balance of risks,” Wednesday’s statement read. 

It’s the decision we saw coming, so markets shouldn’t be surprised. Still, the “Trump trade,” i.e., the rally we’ve seen across the board since the election, appears to have stalled. Stocks, with the exception of Big Tech, have largely traded sideways for most of the month. 

The S&P 500 is up just 0.2% since Dec. 2. The Nasdaq Composite, meanwhile, has gained around 3.7%. Not too shabby of a return, but still down from November, when the index gained almost 6%. 

What gives? Politics. And I’m not just saying that because I’m writing this newsletter from Reagan International. 

“Since Trump announced several unorthodox cabinet nominations, there has basically been an inverse correlation between cyclical stocks and the likelihood these cabinet nominations get confirmed,” Tom Essaye, founder of Sevens Report Research, said. “Prior to Trump’s announcement of Matt Gaetz as AG, Pete Hegseth as Defense, RFK Jr. as HHS Secretary and Tulsi Gabbard as National Intelligence Director, the market was marching steadily higher.”

The slowing Trump rally has markets poised for a Santa rally, some analysts say. We’re still a few days out from the true “Santa rally window” (the last five trading days of the year plus the first two days of the new year), and with the Fed’s decision coming in as-expected, a breakout in equities and crypto could be imminent. 

The Dow Jones Industrial Average is currently on its longest losing streak since 1978 (nine days), but historically slumps preempt runs, at least the vast majority of the time. As a reminder, this is not trading advice!

The S&P 500 was down 0.6% over today’s session in the moments after the Fed’s decision, the tech-heavy Nasdaq Composite had also lost 0.6% just after 2 pm ET.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Nillion_DeSci_Report_Template.png

Research

Nillion’s Monad Integration is poised to catalyze the next phase of DeSci’s evolution by eliminating key privacy bottlenecks. This synergy allows researchers, institutions, and DAOs to exchange sensitive data and insights securely while managing governance and payments onchain.

article-image

Blockworks Research also thinks that net new assets (NNAs) are a metric to keep an eye on

article-image

The Republican-sponsored GENIUS Act has passed a key procedural vote in the US Senate. 

article-image

Cash enables law evasion at a small scale and crypto enables it on a large scale

article-image

Vibe coders are shipping faster than you think

article-image

A downgrade from Moody’s had US Treasury yields on the rise, but history says the volatility should be short-lived

article-image

The game offers 1v1 battles, plus optional NFTs and wagering