As expected, the Fed left interest rates unchanged on Wednesday. Powell implicitly acknowledged that the Fed's rate peak had passed (the market knew that the Fed knew this, but was pretending otherwise). He also paved the way for rate cuts next year, adopting a stronger "pro-growth" tone than the market had expected. The dot plot summarizing the central bank's own rate forecasts points to 75 basis points of rate cuts in 2024. That's a little less than the market forecast (110 points), but it's enough to demonstrate that central bankers have clearly pivoted. Moreover, the Fed has revised downwards its core inflation expectations for 2023, 2024 and 2025.

The CME's FedWatch tool predicts a first rate cut in March at 88%, compared with 41% the previous day and 10.5% a month earlier. US bond yields took the elevator down rather than the stairs, with a 10-year maturity at less than 4% for the first time since last July, while the three major indices gained more than 1%, enabling the Dow Jones to pass the 37,000-point mark and set a new all-time record.

Focus is now turning to the Bank of England and the European Central Bank, which will release their monetary policy decision later today. They are both widely expected to hold their rates steady.

Among stocks, Serco Group, a UK-based outsourcing firm, is up 4.3% after announcing expectations for increased underlying operating profit in 2024. It also plans to acquire European Homecare, a German provider of immigration services, for €40 million, expanding its international immigration services platform.

Essentra PLC, a components, packaging, and filter company, has completed a re-organization of its balance sheet reserves, converting its non-distributable merger reserve into distributable reserves. The move, which was approved by the court and shareholders, led to a 4.88% increase in the company's share price.

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