Fed Plays Rate Cut Roulette While Markets Hold Their Breath

The Federal Reserve keeps dangling rate cuts like a carrot on a stick—just don’t ask when the donkey gets to eat. With economic clouds gathering, Powell & Co. are hedging harder than a Wall Street trader during earnings season.

Here’s the kicker: The ‘data-dependent’ Fed suddenly remembers how to read charts when it buys them time. Classic central bank judo—turn uncertainty into a reason to do nothing while collecting those sweet, sweet basis points.

Meanwhile, crypto markets yawn. Bitcoin’s seen this movie before: fiat systems scrambling to justify their existence while decentralized networks hum along at 24/7/365. Maybe the real rate cut was the friends we made on-chain.

U.S. Economic Data and Cryptocurrency

Initially, the Fed did not anticipate significant outcomes from tariffs. However, on April 2nd, Trump’s declaration of tariffs demonstrated his unpredictable nature, capable of extreme measures without warning. This announcement bred widespread uncertainty and fear, compelling the Fed to brace for the worst-case scenarios concerning interest rate cuts.

Nonetheless, a recently brokered agreement with China in Geneva has buoyed consumer confidence, as indicated in this week’s data. With long-term inflation expectations stabilizing, the agreement’s progress as of July 9th will be pivotal in determining market volatility heading into 2025.

Today, U.S. GDP estimates and initial jobless claims data were anticipated. The quarterly GDP forecast mirrored the previous -0.3% estimate.

Despite the expectations, actual GDP data revealed a -0.2% result. Meanwhile, initial jobless claims recorded 240,000, surpassing the 230,000 projections.

While the GDP data somewhat alleviated recessionary fears, it suggests that the Fed should not delay interest rate cuts. Simultaneously, although jobless claims have not reached alarming levels, they serve as a cautionary indicator for the Fed.