The Federal Reserve's Balance Sheet Reduction Process Has Ended: What Should Investors Do?

Developments After a Busy Week

Following a busy week for international investors, Xi Jinping and Donald Trump held high-level talks, with corporate earnings reports and central bank meetings taking center stage. However, despite these developments, the movements of the stock market indices remained limited. Wall Street closed the week positively, especially due to the rise in significant technology stocks, while European stock markets experienced a slight decline.

Fed Continues Interest Rate Cuts

As expected, the Fed lowered interest rates by 25 basis points and announced that the balance sheet reduction process would end on December 1st. Jerome Powell calmed investors by stating that further interest rate cuts in December were not guaranteed. As a result, the yield on 10-year Treasury bonds in the U.S. rose by about 10 basis points to reach 4.1%.

Strong Growth in the Eurozone

The Eurozone showed stronger-than-expected performance in GDP figures, particularly due to an increase in exports. This positive outlook allowed the European Central Bank to refrain from changing interest rates.

Price Movements in Copper and Precious Metals

Copper prices in London rose to around 11,000 dollars per metric ton for three-month delivery. Global supply concerns, combined with production declines seen in major mining producers, increased expectations for copper demand. On the other hand, gold prices decreased on a weekly basis, continuing to hover around 4,000 USD; however, since January 1, the value increase has exceeded 50%.

Uncertainties in the Oil Market

Ttrade talks between the U.S. and China brought anticipated tariff reductions. However, uncertainties regarding U.S. sanctions and China’s continued purchases of Russian oil created a skeptical atmosphere regarding the impact on oil prices. With a small increase in oil production set by OPEC+ for December, Brent crude oil prices reached 65.24 dollars per barrel, up 0.73%.

Rally in the Stock Market

The month of October heralded a positive trend for the stock markets. The U.S. marked its sixth consecutive month of gains, while Europe recorded its fourth consecutive month of gains. Investors poured a net 10.58 billion dollars into global equity funds last week, driven by expected interest rate cuts from the Fed and the effects of trade deals.

What Does the Future Hold?

In the upcoming week, domestic inflation and PMI data will be closely monitored. The October inflation is expected to be around 2.82%. Additionally, significant corporate earnings reports will be released in the U.S.; companies like Palantir, AMD, McDonald's, and Airbnb will be on the market's radar.