RiskReversal Pod Rapid Reaction: Fed Delivers Expected Rate Cut
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Sep 17, 2025 Dan and Guy react to the Fed's decision to cut interest rates by 25 basis points. They dive into the voting dynamics among governors and debate the Fed's independence. Market winners are highlighted, alongside the struggles of regional banks and the impact of AI concentration in stocks. The duo discusses macro signals from the dollar, gold, and crypto. They wrap up with insights on the market's immediate outlook and potential catalysts to watch as earnings season unfolds.
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Expected Cut, Limited Market Reaction
- The Fed's 25bp cut was widely expected and produced little lasting market reaction.
- The muted response suggests markets already priced this move and see no major regime shift.
Fed Unity Over Political Noise
- Powell built consensus and corralled prior dissenters to avoid public splits on policy.
- That cohesion signals the Fed values independence amid political pressure.
Risk-Management Cut And Long Inflation Path
- Powell described the cut as a 'risk-management' move focused on a weakening labor market rather than restarting easing.
- The Fed projects inflation reaching 2% only by 2028, underscoring a long timeline to full disinflation.