Analysts see short-term jitters, long-term upside for risk assets as monetary easing resumes
Markets are on edge ahead of the Federal Reserve’s September 17 policy meeting, where officials are widely expected to announce a 25 basis point rate cut. While the move is seen as almost certain, traders warn of near-term volatility across risk assets before potential longer-term gains for Bitcoin, gold, and stocks.
Fed Faces Inflation and Growth Trade-Off
The decision comes as the Fed navigates stubborn inflation pressures and signs of slowing economic growth.
According to the latest CPI data, consumer prices rose 0.4% in August, lifting annual inflation to 2.9% from 2.7% in July. Core inflation also advanced 0.3%, reflecting persistent costs in shelter, food, and gasoline.
At the same time, the labor market is cooling. Nonfarm payrolls added just 22,000 jobs in August, unemployment held at 4.3%, and wage growth slowed but remained elevated at 3.7% year-over-year.
“The Fed is in a tight spot — inflation hasn’t fully cooled, but growth momentum is clearly fading,” one investment strategist noted.
Market Pricing and Investor Expectations
Bond markets have adjusted sharply. The 2-year Treasury yield sits at 3.56%, while the 10-year yield stands at 4.07%, leaving the curve modestly inverted. Futures traders assign a 93% probability to a quarter-point cut, according to CME FedWatch.
However, analysts caution that because markets have already priced in the move, the reaction could resemble a “buy the rumor, sell the news” event, with equities and crypto seeing short-lived pullbacks.
Longer-Term Boost for Risk Assets
Despite near-term risks, the outlook for Bitcoin, gold, and equities remains bullish if easier monetary policy persists. The S&P 500 closed at 6,584 last week, its best performance since early August, while the Nasdaq posted five straight record highs.
Historically, rate cuts have provided tailwinds for both precious metals and digital assets, as investors seek hedges against currency debasement.
If the Fed delivers as expected, markets may stumble in the short run — but the long-term setup for Bitcoin and gold looks increasingly favorable.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.