Divided Fed delivers third rate cut, signals only one cut for 2026But stocks cheer Fed’s restart of short-term Treasury purchasesOracle spoils the mood, however, as its earnings revive AI doubtsDollar steadier after dip, Wall Street and Bitcoin reverse earlier gainsFed Rate Cut Brings Mixed ResponsesThe Federal Reserve trimmed its fed funds rate by 25 basis points as expected on Wednesday but signalled just one further easing in 2026 in a hawkish move. But investors may have to wait for some time for that cut as the wording in the FOMC statement suggested January was off the table. Further underlining the hawkish cut were the two regional Fed presidents – Goolsbee and Schmid – who opposed any change in rates, while Trump’s appointed governor, Stephen Miran, again voted for a larger 50-bps cut. It’s likely that the hawkish dissent was even greater among non-voting FOMC members, pointing to more split decisions in 2026.Fed Signals Pause but No Hike, to Buy Treasury BillsHowever, even though the new dot plot disappointed those investors anticipating at least two further reductions in borrowing costs over the coming year, Chair Powell’s post-meeting press conference wasn’t as hawkish as either the statement or projections implied. Powell appeared to rule out a rate hike, saying that it wasn’t in “anybody’s base case at this point”. Furthermore, the Fed confirmed that on December 12, it will begin purchasing short-term Treasury securities to manage liquidity levels.The first round of purchases is expected to be in the region of $40 billion and will “remain elevated for a few months” before being “significantly reduced”.The announcement pushed 2-year Treasury yields about 10 bps lower and longer-term yields also fell. Sovereign bonds were further boosted today from a successful auction of 20-year Japanese government bonds, pulling yields lower globally.Brief Relief Rally Turns into Selloff on Wall StreetFor equity markets, however, any lift from the Fed’s shoring up of liquidity and the subsequent decline in yields was short-lived. Although Wall Street finished Wednesday’s session higher, with the S&P 500 gaining 0.7% and the Nasdaq 100 adding 0.4%, futures turned sharply lower after Oracle’s (NYSE:ORCL) disappointing earnings that came after the closing bell.Oracle’s impressive 53.7% y/y jump in earnings per share in fiscal Q2 wasn’t enough to offset the slight miss in revenue, sending the stock more than 10% lower in after-market trading. Investors are concerned that sales are slowing, as growth in its cloud business and revenue forecasts for fiscal Q3 were also below analysts’ estimates.More importantly, the company plans to spend $15 billion more on AI infrastructure in the current fiscal year than it had predicted in September, reviving worries about whether all the AI capex by tech firms will translate into similar growth in revenue.Bitcoin and Aussie Slump Even as Dollar EasesCryptocurrencies tracked equities’ reversal lower, not that there was much of a rally to speak of. The AI jitters seem to have hit the crypto sector quite hard, with nervous investors judging cryptos as too risky to hold in the current environment. Bitcoin is down more than 2% today, once again testing the $90,000 level. The US dollar, meanwhile, remained on the back foot on Thursday following the post-Fed drop that pushed it below the 156 level versus the yen and lifted the euro towards $1.17. The greenback also eased against the Swiss Franc, slipping to a more than three-week low of 0.7982 today after the Swiss National Bank left interest rates unchanged.As expected, the SNB refrained from signalling the reintroduction of negative rates and anticipated that inflation would “rise slowly in the coming quarters”. On Wednesday, the Bank of Canada also held rates steady, maintaining a neutral stance and citing the Canadian economy’s overall resilience. The US dollar slid to its lowest since late September against the Loonie before firming slightly. However, the Australian dollar bucked the trend, skidding about 0.4% against its US counterpart, after a surprise drop in Australian employment in November led investors to push back the timing of a likely rate hike by the RBA in 2026.Gold Holds in Tight Range but Oil Back Under PressureIn commodities, gold was unable to hold onto its earlier climb to $4,247.58/oz. Despite the softer dollar and lower yields, the absence of a major dovish shift by the Fed will make it difficult for gold to make a convincing break above the strong resistance area of $4,200/oz.Oil prices also fell back, weighed by the mixed risk sentiment on the back of this week’s hawkish central bank decisions. News overnight that the US has seized a sanctioned oil tanker off the coast of Venezuela only temporarily boosted oil futures. Whilst there is a sizeable risk of a further escalation of tensions between the two countries that could potentially cut off Venezuelan oil exports to countries such as China, markets are more concerned about the somewhat gloomier demand outlook right now.