SNB Surprise 50 BPS Cut Leads to Franc Weakness – Europe Market Wrap

US stock futures indicated a slightly worse Wall Street session, as Treasury yields increased ahead of the Federal Reserve’s policy meeting next week.

Contracts on the S&P 500 fell 0.2%, while those on the Nasdaq 100 fell 0.3%. Both indices rose sharply on Wednesday, as an in-line US inflation reading reinforced swap markets’ views of a quarter-point rate drop at the Fed’s December 17-18 meeting.

Traders are now waiting for US producer inflation data, which is due later Thursday, as well as the weekly jobless claims report, for more signals on pricing and the economy’s health

The European Central Bank is expected to decrease policy rates by a quarter-point, following the Swiss National Bank’s surprise 50-basis-point cut earlier today. With an ECB cut – its fourth this year – already baked in, traders will wait for clues from rate-setters on the extent of loosening needed in this cycle.

The ECB cut will be the latest in a series of steps by major central banks this week to ease policy. Prior to the Swiss rate cut, Canada lowered its policy rates by half a point, Australia hinted at cuts, and China promised rate cuts. However, Japan has indicated that it is not in a hurry to raise interest rates.

ifo Institute forecasts growth between 0.4% and 1.1% for Germany in 2025.

SNB’s Chairman Schlegel: We still have ammunition left on rates.