Table of Contents

1. Introduction
2. How Fed Sentiment Became the Primary Market Driver
3. CPI, Labour Data, and Why Markets Lean Dovish
4. ISM Miss: Temporary Shock or Recession Signal?
5. Current Market Structure
6. Catalysts to Watch
7. Conclusion

1. Introduction

With the Federal Reserve approaching its December decision, markets are oscillating between optimism from cooling inflation and caution triggered by weakening activity data.

2. How Fed Sentiment Became the Primary Market Driver

The same macro forces influencing the US dollar’s weakness are driving equity resilience:

• Markets are pricing a high probability of a rate cut, pushing risk assets higher.
• The dollar weakens as investors rotate into equities and growth assets.
• Fed communication has leaned neutral-to-dovish, reinforcing the trend.
• Sentiment is highly reactive to labour and inflation expectations, making equities ride the same macro wave as USD pairs.
• The absence of clear forward guidance from Powell has injected short-term uncertainty.

3. CPI, Labour Data, and Why Markets Lean Dovish

Recent data strengthened the dovish bias:

• CPI increased less than markets expected.
• Labour market weakness resurfaced as unemployment ticked higher.
• Dovish-toned comments from Fed representatives supported easing expectations.
• A 25 bps cut next week is now widely viewed as “locked in,” barring surprises.

Local Implication (global):
Risk assets gain medium-term support, but near-term volatility remains tied to upcoming data.

4. ISM Miss: Temporary Shock or Recession Signal?

Yesterday’s ISM Manufacturing PMI dropped into contraction, triggering:

• Short-term outflows from stocks as recession fears resurfaced.
• A shift in intraday sentiment from bullish to defensive.
• The narrative that “too much weakness” could undermine the rally rather than accelerate rate cuts.

Even with this shock, the dominant structure remains bullish, investors still view easing as supportive.

5. Current Market Structure

Recent price action:

• Daily candle closed strongly bearish → signaling short-term exhaustion.
• 4H and 1H structures flipped into clean bearish intraday flow.
• Support broke, confirming a short-term momentum shift.
• Consolidation dominates as markets wait for the Fed and high-impact data.

If price retests and respects yesterday’s broken intraday low, a deeper correction could develop toward pullback zones aligned with MRKT’s intraday-timeframe structure.

6. Catalysts to Watch

• Federal Reserve Meeting next week: key driver of sentiment and volatility.
• Labour Data later this week: markets want confirmation of softening.
• Inflation Prints: any upside surprise risks reshaping expectations instantly.
• Geopolitical Risks: global growth concerns can amplify weakness in risk assets.

7. Conclusion

Despite short-term bearish intraday structure, the broader risk backdrop remains bullish as long as the Fed stays dovish leaning.
Traders should stay patient: the best setups typically appear just before major macro events, exactly where markets are now.