Institution: The Fed's combination of interest rate cuts and balance sheet reduction may boost market risk appetite

The Federal Reserve's policy committee is likely to take two decisively dovish actions on Wednesday: a 25 basis point rate cut and signals of further easing, while also announcing the end of its balance sheet reduction program (a move that could put downward pressure on Treasury yields). Derek Tang, an analyst at Fedwatch's LHMeyer, noted: "The dual actions of a rate cut (coupled with expectations of further easing) and an early halt to the balance sheet reduction program will significantly support market risk appetite." He added that while the end of the balance sheet reduction this week remains uncertain, the recent tightening of financing markets has significantly increased the likelihood of such a decision. (Jinshi)