BTCUSDT Why Is the Market Still Irrationally Pricing in Rate Cuts?1. Old Habits Die Hard
After 15 years of QE and ZIRP (zero interest rate policy), the market is hardwired to expect the Fed to rescue risk assets.
Investors are addicted to stimulus and still think “bad news = rate cuts = stocks go up.”
2. Hopeful for a Soft Landing
The economy hasn’t crashed, inflation is sticky but not surging = perfect excuse for traders to say:
“The Fed will cut soon just in case.”
That “just in case” logic keeps speculative assets floating.
3. Political Pressure & Elections
Markets are hoping the Fed gets political pressure to cut before the U.S. election.
Especially with Trump yelling “RATE CUT NOW!” and Biden wanting a stable economy.
4. Lagging Data vs. Forward Guidance
Real-time economic pain (esp. small businesses, credit conditions) isn’t showing up in lagging CPI/PCE data yet.
Markets are front-running potential cracks they think are coming.
5. Too Much Liquidity
Even at 5%+ rates, there’s still trillions of dollars sloshing around.
Excess liquidity chases risk assets regardless of logic. Narrative > reality in the short term.
