Market Sentiment Shifts as Fed Implements Insurance Rate Cut

According to PANews, QCP Capital has analyzed recent market trends, noting a shift in sentiment from panic to recalibration. The U.S. Federal Reserve's recent 25 basis point insurance rate cut has reopened the door to easing, although Fed Chair Jerome Powell has framed it as a risk management strategy rather than the start of a deep easing cycle. With economic activity remaining robust and core inflation near 3%, future rate cuts may be limited unless there is a significant downturn in economic growth. Long-term yields have risen due to term premiums and supply pressures, while the stock market has reached new highs. Gold prices, which had previously surpassed $3,700, have since retreated. The dollar has rebounded alongside U.S. Treasury bonds, indicating that unidirectional shorting of the dollar is no longer risk-free. Analysts suggest that the Federal Reserve's policy may still be relatively tight, with room for adjustment compared to lower neutral rates, potentially lowering the threshold for further easing. However, consumer resilience and the slow dynamics of hiring and firing in the labor market allow the Fed to proceed cautiously. Additionally, Europe and Japan no longer significantly outperform the U.S., suggesting the dollar may have bottomed out, while gold and Bitcoin reflect market skepticism about a return to aggressive hawkish policies.