Today we have these scenarios:

Rate cut of 0.25% (25 basis points)

- Modest signal: This indicates a minor adjustment in monetary policy, suggesting that the Fed is trying to support the economy without signaling a major crisis.

- Equity market: The reaction is positive but moderate, as a small drop in interest rates encourages investment but does not suggest a significant economic problem.

- Bonds: Bond prices could rise slightly due to falling yields.

- Alternative assets (Bitcoin, gold): Minimal impact, but these assets could become slightly more attractive to investors looking for higher returns.

Rate cut of 0.50% (50 basis points)

- Moderate-strong signal: This indicates a more serious concern about the global economy and the need for stronger stimulus.

- Equity market: Investors see this as a positive signal for boosting economic growth, and equities could react favorably.

- Bonds: A significant reduction in yields, making bonds more attractive.

- Alternative assets: Both Bitcoin and gold could benefit from a 0.50% rate cut as investors begin to seek safe havens against currency depreciation and rising inflation.

Rate cut of 1% (100 basis points), that would be fabulous

- Very strong signal: A drastic measure, indicating that the Fed is very concerned about the state of the economy and is trying to inject significant liquidity.

- Equity market: Reaction may be mixed. Initially, stocks could rise due to lower borrowing costs, but a 1% drop could also signal panic, which could create uncertainty.

- Bonds: Bond prices would rise sharply, yields would fall significantly, and investors would seek safe assets.

- Alternative assets: Gold and Bitcoin could see significant gains as such a large rate cut could trigger fears of or a deeper economic crisis.

Conclusion:

- The rate cut of 0.25% has limited effects, but helps to stimulate the economy in the short term.

- The 0.50% rate cut suggests a more serious economic

- The 1% rate cut is an extreme measure, having the potential to destabilize financial markets and make alternative assets much more attractive.