What are the current market expectations regarding the Fed's rate cut decision?

The current market expectations regarding the Fed's rate cut decision are as follows:

1. Probability of a Rate Cut: The market-implied probability of a 25-point rate cut at the upcoming FOMC meeting in December is about two-thirds, while there's a one-third probability of no cut. This suggests that the majority of market participants expect the Fed to continue its rate cut cycle.
2. Expected Rate Cut Size: Economists polled by FactSet forecast that the Fed will shave borrowing costs by 0.25 percentage points, or half the size of its September reduction. This would bring the federal funds rate down to a range of 4.5% to 4.75% from its current 4.75% to 5% level.
3. Future Rate Cut Expectations: Market expectations suggest that the Fed may cut rates by 25 basis points at both the November and December meetings, followed by four more 25 basis point cuts through 2025. This implies a gradual but sustained rate cut trajectory.
4. Market Reaction: The market has largely been positive in response to the Fed's rate cut announcements, with stocks often rallying after a rate cut. This is because lower rates can stimulate economic growth and corporate profits, which can positively impact the stock market.

Overall, the market expects the Fed to continue its rate cut decision, with a focus on a gradual and measured approach to reducing interest rates.