Federal Reserve, big news on interest rate cuts! Just now, silver prices plummeted straight down.

【Introduction】White House officials believe there is still ample room to cut interest rates, while Federal Reserve officials oppose this; silver surged significantly yesterday, but opened sharply lower today.

Good morning everyone! Many major events have occurred overnight and this morning.

The major U.S. stock indices closed slightly lower, with large tech stocks mixed, and most Chinese concept stocks declining. White House Economic Advisor Hatzius believes the Federal Reserve still has plenty of room to cut rates, though Fed officials are divided. According to CME’s “FedWatch,” the probability of the Fed holding rates steady in March is 94.1%.

Major U.S. stock indices close slightly lower

The major U.S. stock indices closed modestly lower: Dow down 0.13% at 50,121.4; S&P 500 unchanged at 6,941.47; Nasdaq down 0.16% at 23,066.47.

IBM fell 6.53%, Seagate Technology dropped 4.40%, Boeing declined 2.60%, leading the Dow components lower.

On the gain side, Caterpillar rose 4.40%, Verizon Communications increased 3.31%, Coca-Cola gained 2.32%.

Large tech stocks mixed

Large tech stocks showed mixed performance, with the Big Seven U.S. tech giants index down 0.57%. Among individual stocks, Google and Microsoft fell over 2%, Amazon declined more than 1%, Facebook dropped 0.3%, Tesla rose 0.8%, Nvidia increased 0.78%, and Apple gained 0.67%.

Most Chinese concept stocks declined

Most Chinese concept stocks declined, with the Nasdaq Golden Dragon China Index down 0.65%, and the China Tech Index down 0.98%.

NetEase fell 4.06%, Baidu Group declined 1.72%, Tencent Holdings dropped 1.67%, leading the China Tech Index components lower.

Other stocks included Hesai Technology down nearly 6%, Huya down over 5%, JinkoSolar down more than 5%, Canadian Solar down over 4%, Qifu Technology down over 4%, Bilibili down nearly 4%, TAL Education Group down over 3%. On the upside, China Internet Plus Holdings surged over 12%, Kingsoft Cloud rose about 10%, Bilibili increased nearly 3%, Huazhu Group up over 2%, NIO gained over 2%, Miniso International up over 2%, ZTO Express rose nearly 2%, and KE Holdings increased about 2%.

White House “doves”

Divergence among Fed officials

White House Economic Advisor Hatzius stated that the rapid development of artificial intelligence can boost productivity and economic growth. Inflation data will be a key factor in the Fed’s decision-making. He believes the Fed still has ample room to cut rates and that a 4% to 5% GDP growth rate is easily achievable this year.

Fed Governor Mester expects inflation to decline significantly this year. Increasing supply through productivity gains and deregulation can expand output and help lower inflation. January employment data does not mean rate cuts are impossible; there are still many reasons to lower rates.

Fed official Williams said that, based on the central bank’s responses, price shocks are “temporary,” and the Fed needs to continue focusing on the 2% inflation target. Inflation is “very likely” to stay near 3%, and he supports keeping rates at “somewhat restrictive” levels. The link between AI and recent productivity gains remains unclear.

Market widely expects no rate cut in March

According to CME’s “FedWatch,” the probability of the Fed cutting rates by 25 basis points by March is 5.9%, with a 94.1% chance of holding rates steady; by April, the probability of a 25 basis point cut is 20.5%, with a 78.5% chance of no change, and a 1% chance of a 50 basis point cut; by June, the chance of a 25 basis point cut is 48.1%.

Global precious metals futures mostly higher

Silver opens sharply lower today

On February 11 (local time), international precious metals futures mostly closed higher. COMEX gold futures rose 1.53%, closing at $5,107.80 per ounce.

COMEX silver futures surged by 7.14% at one point, closing at $84.085 per ounce, up 4.60%.

At the open on February 12, COMEX silver futures reversed course downward. As of press time, they were at $81.7 per ounce, down 2.65%.

Supply shortages in the silver market continue to support investment demand. The World Silver Survey expects the market to experience a supply deficit for the sixth consecutive year. Despite weakening industrial demand, strong investment demand remains a key driver of silver prices. Geopolitical tensions and policy uncertainties further enhance silver’s appeal as a safe-haven asset, causing significant volatility in mining stocks. Short-term technical momentum remains strong. Additionally, some institutions and companies are increasing silver investments as a store of value and risk diversification, reflecting market confidence in silver’s long-term appreciation potential.

Recent comments from Fed officials have further delayed market expectations for rate cuts, with TD Securities pushing the next expected rate cut from March to June. The stability of interest rate policies and inflation concerns may boost the attractiveness of precious metals as inflation hedges, indirectly affecting silver market sentiment.

U.S. non-farm payroll data for January exceeded expectations, with unemployment slightly declining, indicating a strong labor market. Following the data release, the probability of a Fed rate cut decreased significantly, and the dollar index and U.S. Treasury yields were boosted. Nonetheless, precious metals markets have held most of their gains amid ongoing geopolitical tensions, with safe-haven demand remaining a market theme.

Meanwhile, U.S. tariff revenues surged, helping to reduce the budget deficit, but a Supreme Court ruling on tariffs could further impact government finances and market sentiment, adding uncertainty to the volatility of silver and other precious metals prices.