The crypto and stock market showed a broad rebound as new signals from officials renewed hopes for a possible fed rate cut in the near term.
Traders responded to remarks from New York Fed President John Williams, who suggested that policy easing could still occur despite mixed economic data.
Fed Rate Cut Signals Trigger Market Shift
The stock market rebound on renewed rate cut hopes shaped overall trading activity this week.
John Williams said the Federal Reserve could adjust rates soon. His statement came after weeks of uncertainty in the Fed’s direction.
Investors had watched conflicting labor data slow market momentum. His comments now open the door for possible easing.
Labor data showed non-farm payrolls increased by 119,000 jobs in September. The prior month saw a revised loss of 4,000 jobs.
The unemployment rate rose to 4.44%. Several analysts said this rise could support a December Fed rate cut. Citi said officials might support easing if they view current policy as restrictive.
Other major brokerages maintained divided opinions. JPMorgan and Standard Chartered withdrew their expectations for a cut. Morgan Stanley also shifted away from a December Fed rate cut.
However, Deutsche Bank, Wells Fargo, Citigroup, and BNP Paribas repeated their forecast for a 25 basis point cut. They added that the chance of a hold has also increased.
The CME FedWatch tool showed traders placed a 67.1% chance on the Fed keeping rates unchanged in December.
Nomura and BofA Global Research also projected no cut. BofA said the December meeting remained a close call but not its base case.
Williams said inflation progress had stalled in recent months. He added that the current stance of policy remained modestly restrictive.
He said there was room for adjustment to bring the policy closer to neutral. His remarks shifted market pricing and offered traders renewed clarity.
Gap Widens Between Crypto & Broader Market Pricing and Fed Outlook
Vanguard said traders expected more cuts than the Fed could likely deliver. Analyst, Sara Devereux said only one or two cuts might occur after two reductions earlier in the fall.
She said the market is priced in three to four Fed rate cuts before 2026. Additionally, she said that expectation did not match economic conditions.
Her team raised GDP forecasts due to rising spending on artificial intelligence.
She noted higher investment in chips, data centers, and cloud systems. Additionally, she said stronger growth could limit how much easing the Fed could pursue.
The Treasury market also faced pressure from hedge fund trades. Lisa Cook warned that leveraged positions in Treasury securities increased market vulnerability.
Cayman Islands-based funds held more Treasury securities than other foreign private holders.
Nevertheless, investors now wait for the December meeting as rate expectations continue to guide stocks, bonds, and crypto market.
The market rebound on renewed rate cut hopes could set the tone for the weeks ahead.
Bitcoin and Crypto Market Moves After Fed Remarks
It is worth noting that the question of whether crypto will follow is now gaining attention after Bitcoin moved sharply.
Bitcoin dropped 2% on Friday and posted a weekly loss of about 10%. The price reached levels last seen in April as it dropped below $81,000. Investors reduced risk positions as uncertainty grew.
Bitcoin then rebounded quickly after the commentary from Williams. The price rose from $80,600 to $84,000 within minutes.
It had fallen from over $107,000 on November 11 to a new seven-month low.
Crypto traders monitored Polymarket, where rate cut odds shifted. The 25 basis point cut option rose to 62% after his remarks.
Market watchers said the rebound showed Bitcoin remained sensitive to monetary signals. The crypto market could follow broader asset trends if rate cut expectations strengthen.