Huatai: Fed to Cut 25bp in September, Further Easing Likely
Huatai Securities fixed-income research warns of mounting downside risks to US employment growth, suggesting a shift in the Fed’s risk balance. After Chair Powell’s Jackson Hole speech, market participants have fully priced in a Fed rate cut. The report forecasts a 25bp Fed rate cut in September as the baseline scenario. It also sees a higher probability of two 25bp cuts in Q4 rather than just one. Factoring in potential influence from the Trump administration, this easing cycle could exceed market expectations. The anticipated Fed rate cut and broader monetary easing are likely to bolster risk sentiment and asset prices.
Bullish
An anticipated Fed rate cut and ongoing monetary easing typically boost liquidity and risk-on sentiment. Historically, rate easing cycles have supported rallies in Bitcoin and altcoins by lowering borrowing costs and increasing market liquidity. Should the Fed cut rates in September and execute additional cuts in Q4, traders may see enhanced short-term momentum in crypto markets. Over the long term, prolonged monetary easing could underpin broader adoption and investment in digital assets, reinforcing a bullish outlook.