Markets Certify 100% Fed Rate Cut by October

Market expectations have shifted dramatically, with investors now firmly believing a 100% chance of an interest rate cut from the Federal Reserve in October. This dramatic shift is driven by recent economic data that has been soft, as well as increased geopolitical risks and tightening financial conditions. However, despite this near certainty of a rate cut, experts warn that a true market rally may not occur unless the Fed simultaneously ends Quantitative Tightening (QT), its process of shrinking the balance sheet. While rate cuts inject short-term liquidity, QT still drains longer-term liquidity from the financial system.