Financial markets are in a meltdown and each leg less boosts expectations in the credit market that the Fed will offer support.
Bitcoin (BTC), the leading cryptocurrency by market value, traded 8% lower and $ 75,800 and the US stocks were on track for their Worst three-day performancewith the S&P 500 futures down almost 5% on Monday and the losses approaching 15% in general.
The Fed has a history of intervening during financial meltdowns with rate cuts and other stimulus steps. Thus, the merchants, who are accustomed to the support of liquidity, estimated that the Fed will act similarly at this time.
According to Tool of CME Fedwatch. By the end of the year, the market sees the Fed fund rate falling less than 3.00-3.25%.
The risk-off, in conjunction with the frightened and fed rate cut bet, gives Trump administration what it wants-the collapse of the yield yields. All important 10-year yield-the benchmark for the US economy-has dropped to 3.923%.
The popular narrative is that the lower yields will make it easier for the treasury to refine trillion dollars in debt in the coming 12 months, which is why Trump management could be more tolerant of seizing the asset market.
This restraint derived from a policy shift under former Treasury Secretary Janet Yellen, who moved from longer coupon issuance to short-term bills. Since 2023, approximately two-thirds of the deficiency have been funded by the inhumance of the bill-short-term debt with rates attracting around 5%. While this can be temporarily supported by liquidity, it created a bomb time of expensive short-term debt that now needs to be roll.
