---
title: "Federal Reserve: Burst all assets"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/222738819.md"
description: "The Federal Reserve's hawkish interest rate cut has triggered turmoil in global markets, with the S&P 500, Nasdaq, and Dow Jones all experiencing significant declines, and the VIX panic index reaching a new high since August. Federal Reserve Chairman Jerome Powell is optimistic about the economic outlook, expecting only two rate cuts by 2025. The U.S. dollar is strong, while other assets generally decline, especially Bitcoin, which plummeted 5.7% due to the Federal Reserve's statements. The market's reaction to the Federal Reserve's policy reflects divisions and unease about the future economy"
datetime: "2024-12-19T01:11:21.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/222738819.md)
  - [en](https://longbridge.com/en/news/222738819.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/222738819.md)
---

> 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/222738819.md) | [English](https://longbridge.com/en/news/222738819.md)


# Federal Reserve: Burst all assets

**Waking up, the whole world has been sanctioned by the Federal Reserve and the US dollar.**

To summarize this extremely hawkish interest rate cut:

1.  This interest rate cut of 25bp had one dissenting vote, **Cleveland Fed President Loretta Mester believes that this cut should not have happened**, marking the second dissenting vote since September after Bowman, indicating **significant internal divisions within the Federal Reserve**.
    
2.  The critical dot plot shows that **the Federal Reserve expects to cut rates only twice by 25bp in 2025, which is two fewer than the September dot plot and one less than the market's general expectations for the dot plot**.
    

1.  Economic forecasts are **broadly optimistic**, with GDP and CPI being raised across the board.

1.  At the press conference, Powell was very optimistic about the economic outlook, stating that the US economy has avoided recession, “the risks of achieving employment and inflation targets are roughly balanced, and we are focused on the risks in both inflation and employment dual targets,” and “**we must continue to maintain a restrictive policy**.”

Of course, it's not just the Federal Reserve; in fact, global markets are extremely optimistic about the US economy next year: **due to tax cuts, tightening immigration, relaxing domestic regulations, and increasing tariffs, manufacturing growth is accelerating, employment is hot, and inflation is rising**. According to Bank of America's December global investor survey, a large amount of capital is flowing into the US market for direct investment or allocation of US dollar financial assets, which will undoubtedly push up the dollar.

**That night, global assets were bloodied, everything fell except the dollar.**

-   Stocks: The S&P fell nearly 3%, the Nasdaq fell over 3%, and the Dow experienced ten consecutive declines, marking the longest losing streak since 1974. Panic surged, with the VIX fear index rising 74.04% in a single day, closing at 27.62, the highest since mid-August.
    
-   Bonds: The 2Y US Treasury yield rose by 11.4bp, and the 10Y US Treasury yield rose by 12.7bp, with the market's expectation for the Federal Reserve to cut rates in 2025 remaining at only 31bp.
    

-   Currency: The US dollar index stabilized at 108, while the euro, Australian dollar, and offshore yuan all hit new lows for the year.

-   Commodities: WTI crude oil, Brent crude oil, and spot gold all fell more than 2% after the FOMC.
    
-   Cryptocurrency: Bitcoin plummeted 5.7% after Powell stated, "The Federal Reserve does not allow and has no intention of holding Bitcoin."
    

**Summary:**

-   **The Federal Reserve's strong hawkish stance has almost killed the possibility of a weaker US dollar index by the end of the year. As the official inauguration date of Trump on January 20 approaches, the US dollar is likely to find it difficult to weaken significantly.**
    
-   **Returning to forex trading, it is unwise to take a contrarian short position on the US dollar. If the US dollar index experiences a pullback, it presents a good opportunity to position for a long on the US dollar, with a preference for USDCNH long and EURUSD short.**
    

Author: Zhang Haoyu, Source: Good Morning Forex Market, Original Title: "Federal Reserve: Blowing Up All Assets"

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk

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