In 2025, the first federal reserve bank’s 25 Basis Point (BP) rate cuts set a stage for several weeks of market discussion.
The action was expected to be widely expected, but at a press conference yesterday, the walking tone of Jerome Powell and the rapidly divided dot plot of the Fed were curious about what would happen next to investors.
POWELL signals risk management pivot
POWELL cited the cracks in the US labor market, constructing interest rates by the opening ceremony at the opening ceremony.
The long -term unemployment rate rises, and the modified salary figure showing 911,000 jobs with 911,000 jobs than previously reported, pointing out the weaker foundation than the headline number suggests.
boost
boost
Powell said, “The risk of inflation is inclined to rise and employment risks are inclined.”
The Fed Chairman also mentioned that policymakers do not need to move quickly to interest rates, but they must be preemptively to prevent deeper stagnation.
Powell insisted that the pass -through was “slower and smaller than expected, ignoring the inflation of the Trump tariff.”
But he admitted that the price pressure could last 2026. At the same time, he described the labor market as “not solid” anymore.
He cited the slowing of employment, immigration reduced supply, and AI adoption potentially measured the weight of the entry level work.
conclusion : POWELL’s remarks were much more miserable than his 2024 guidelines when the Fed cut 50bps interest rates. This suggests intentional pivot to determine employment priorities rather than inflation.
Market reaction with Fed Divisions on the entire display: Dollar slide, stock eye liquidity
The new dot plot unveiled a central bank struggling to find an agreement. Nine out of 19 are expected to see more than two more cuts this year, and 6 people will no longer be relaxed.
Trump’s appointment, Stephen Miran, opposed it in favor of reducing 50bps.
JIM Bianco, a huge investment researcher, said, “This meeting was confused. One member thinks of the Fed’s hiking, another member, I think we are getting five cuts, which makes it more damaging to the fantasy of the” consensus “and publishing such a wide point plot.
boost
boost
Meanwhile, Kobeissi Letter was called Move Historic, and Core PCE inflation emphasized the first cut for 30 years, with more than 2.9%.
Kobeissi said, “The market is expected to be reduced four more times by September 2026.
Immediate market response was quick. The US dollar has fallen to the weakest since February 2022, and stocks have maintained record high.
Future Market has been priced by two additional cuts by the end of the year, and KALSHI data shows the possibility of cutting more than 60%of spikes.
What did the market interpret in the POWELL speech yesterday?
When the Fed accounted for an all -time high in the stock market within 2% of the stock market, the S & P 500 historically increased 100% for the next 12 months, gaining an average of 14%.
Fidelity’s Jurrien Timmer compares the LTCM crisis in late 1998. The Greens Span was relaxed into a powerful market, causing a brilliant rebound.
boost
boost
The encryption market is also closely watching the flow of liquidity, and the analyst, ASH Crypto, emphasizes the outlook for more fluid with more interest rates. He said it would be converted into a potential pump with a password price.
The analyst wrote, “More cuts = more liquidity = pump.”
If you pay attention
Nevertheless, not everyone is convinced that everyone is foretelling the extended bull cycle. Mark Minervini claimed that the Fed’s movement was a “token” cut. Given the persistence of inflation, he said he would not start an aggressive mitigation path.
“Interest rate cuts are generally optimistic. Especially when they occur outside the economic downturn, the Fed is especially preemptively reduced instead of responding to the recession. The difference is important. This can reduce the market impact by lowering the possibility of aggressive mitigation route.”
Meanwhile, economists of dialogue emphasized the balance.
Customs -oriented price pressure complicates the paintings of low -income families who spend more costs to imports of imports, especially for imports of imports.
Henrik Zeberg, a long -term analyst, warned that the market could enter the pandemic explosion stage before the serious recession.
boost
boost
“Liquidity will now build a higher point in which the market can collide,” he compares today’s rally to the late 1920s.
Next time
Investors are in an unstable position due to the difference between strong market technology and basic weakness.
Investors think that PoWell has signaled that additional cuts are coming. In this background, at least now an emotion with records and encryption climbing is optimistic.
At this point, Bitcoin traded for $ 117,107 and Ethereum exchanged hands for $ 4,572. Both assets showed strengths in accordance with the Fed’s decision.
Nevertheless, there is a lot of risk and continues to erode investor trust. This includes:
- Labor market softened by the economic downturn,
- Customs -based inflation sticky
- Political tone for “risk management” frames in PoWell.
If the Fed is too aggressively cut, it will lose inflation fight reliability. At the same time, if the unemployment rate increases, you can force more drastic actions later when you move too carefully.
Therefore, a few weeks of dangerous assets, such as Bitcoin, can be defined by liquidity -centered optimism. But this is to understand that this rally is on an easy basis.
It is worth noting that Powell himself admitted that the Fed was exploring the “challenging situation” that both sides of the mission blinked in red. The history of such a moment is often rallyed by the market.