Fed Prepares to Slash Rates—Wall Street Bets on Dovish Pivot Next Week

Markets brace for potential Fed rate cuts as inflation cools—or so the central bank claims. Traders are already pricing in the dovish turn, with crypto and risk assets primed for a liquidity-fueled rally.

Behind the curtain: Another coordinated attempt to prop up asset prices while Main Street struggles with sticky costs. Classic Fed move—cut rates, inflate bubbles, rinse repeat.

Hiring freeze spreads as tariffs throw companies into chaos

Next week, the Fed will have to decide what to do about all this. Most people still expect them to hold steady. But Vicky’s not so sure. She said recent economic numbers are shaky enough that a rate cut can’t be ruled out. She reminded everyone that GDP shrank in Q1. Even though the annualized rate shows just a 0.3% drop, it’s still a big red flag. It’s not a sharp fall, but it means the economy isn’t really growing.

Vicky explained that April’s PMI data shows manufacturing is getting hit hard. Even the services sector, which had been more stable, is now slowing down. She said the services industry is “just growing”—barely moving forward. All of this signals that the economy is stalling, not gaining strength.

So what’s stopping the Fed from cutting already? Inflation. They’re still trying to keep a lid on it. But even with that concern, Vicky said a rate cut could still happen soon. If it doesn’t come next week, it’ll come soon after. “The economy is definitely showing signs of a slowdown,” she said.

Europe’s economy is also feeling the burn

The Eurozone is in a similar mess. Inflation held steady at 2.2%, which is technically NEAR the ECB’s target. But Vicky made it clear that central bankers there are still nervous. Growth in the EU got a little bump in Q1.

But that was just importers trying to beat tariff deadlines. Companies rushed to ship goods before new charges landed. That built up inventories in the US and temporarily made Europe look stronger than it actually was.

The latest April data shows that growth isn’t sticking. Manufacturing is still shrinking. It’s not falling apart, but it’s not growing either. Services, which had been a stronger area in some countries, are now slowing down too.

Governments and the European Commission are already throwing more spending into the mix, trying to avoid a deeper slump. That includes budget boosts and new support packages. Vicky said rate cuts are still on the way, probably faster than people expect. She said we might even see another one in June. The ECB is already ahead of the Fed on that front, and Vicky said they’ve made the right call.

She pointed out that in countries where rates have already dropped, mortgage lending is picking up. People are surprised, but the math makes sense—cheap rates mean easier loans. And that trend is priced in now. Everyone expects low rates.

Vicky wrapped up by saying more rate cuts are “definitely coming,” both in Europe and the US, as policymakers scramble to manage the fallout.

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