As widely expected, the Fed lowered interest rates by 25 basis points yesterday and announced it will end QT from December 1st — by reinvesting maturing Treasuries fully rather than letting them roll off. But Powell dampened the mood, saying that “a further reduction of the policy rate at the December meeting is not a foregone conclusion”, even though markets had priced in a 90 % probability of another cut. That hurt sentiment.

The US 2-year yield — which best captures Fed expectations — jumped 13 bps to above 3.60%, while the probability of a December cut fell to 70%. The US dollar rallied across the board. Among majors, sterling was one of the hardest hit: cable slipped below its 200-DMA and will likely remain under pressure until the Autumn Budget.

The USDCAD dived to its 50-DMA after the BoC announced a 25 bp cut but recovered as the Bank signaled it’s probably done easing this cycle. The EURUSD briefly dipped below 1.16, though the move didn’t breach any key technical levels; the European Central Bank (ECB) is expected to keep rates unchanged at today’s meeting.

Meanwhile, the USDJPY extended gains to the doorstep of 153 in Tokyo this morning as the BoJ kept its policy rate unchanged. The BoJ remains committed to further normalization — so more hikes — but expects inflation to ease from 2.7% to 1.8% next year, hinting they’re not in a hurry.

In summary, the US dollar is stronger on a hawkish readjustment in Fed expectations, and the rest of the G7 complex could feel pressure in the coming weeks — especially sterling on budget concerns. Yields could rise further to reflect the new reality of an uncertain December cut.

And prospects of fewer or slower rate cuts from the Fed don’t thrill risk traders. Equity markets sold off on Fed announcement, with the S&P 500 and Nasdaq retreating sharply after hitting all-time highs at the open.

Happily, Nvidia was there to save the day! The company became the first in history to reach a $5 trillion valuation after CEO Jensen Huang announced a series of new deals in and beyond the US — and even beyond the chip industry.

The Nokia partnership stood out, signaling that Nvidia is stepping into communication and networking to ensure that the massive data flows generated by AI applications don’t get stuck on outdated networks. Huang wants networks to be AI-driven — able to sense and manage data traffic to avoid congestion and reduce processing times.

The company remains a step ahead of the game — no one can deny that — and continues fighting for dominance despite others like Qualcomm joining the race. A small bump on the road, though: the Trump–Xi meeting might have been “amazing,” but the two leaders reportedly didn’t discuss Blackwell chip exports to China — a disappointment to some. Still, Huang has repeatedly told investors to assume China revenue will be zero — so anything above that is just the cherry on top.

Bottom line: Nvidia gives chills to those who don’t own it and attracts criticism from those who don’t — but the truth is, the earnings keep up.

You know who’s struggling to keep up? Apparently, Microsoft. Despite massive AI infrastructure spending, Microsoft said its Azure cloud unit hit capacity constraints last quarter. Revenue, cloud growth and earnings beat expectations, but the need for even more spending to meet insatiable cloud demand discouraged investors — sending the stock 4% lower in after-hours trading.

A similar reaction followed Meta’s results. Meta reported better-than-expected revenue and adjusted earnings but said it must spend more aggressively on AI next year to avoid “underinvesting.” The stock plunged more than 7%.

Google, however, pulled it off. Revenue surpassed the $100 billion mark, EPS came in far above expectations, and the 34% jump in Cloud revenue pleased investors. They also pledged to keep spending on AI, but Google’s growth in cloud revenue pleased investors more than Azure’s 39% growth versus 37% expected.

Today, Apple and Amazon will reveal how they performed last quarter, with AWS in particular in the spotlight.

Beyond earnings, the ECB will announce its policy verdict and will likely repeat that policy is “in the right place” for now.

And finally, Trump called his meeting with Xi “amazing and outstanding” — news that somewhat offsets yesterday’s Fed disappointment, though not enough to suggest a positive start for US indices this morning.