Strategists warn that Warsh's "rate cut declaration" may contain hidden traps, the cost of which could be a global liquidity crunch.

Damian Boyle, portfolio strategist at Wilson Asset Management, said that Warsh has publicly expressed a preference for lower interest rates. However, his trade-off for rate cuts was the Federal Reserve's desire to shrink its balance sheet. The market's reaction seems to be a question: what would the world be like if the Fed's balance sheet shrank? Once the talk of removing the foundational support begins, all assets that people have been using to hedge against balance sheet expansion, such as gold, cryptocurrencies, and obviously bonds, will begin to be sold off. (Jinshi)