And if the Fed had lowered the rate in July⁉️
The fall would have been MUCH stronger! Why?
On July 31, the Bank of Japan raised its rate for the second time by 0.25%. The first time was on March 19: S&P500 did not react at all, and $BTC fell by 9% from 68k to 61.5k.
If the Fed lowers the rate and the Bank of Japan raises it, then the yen strengthens and the dollar weakens! And the spread on both sides narrows on the amount of the rate in the carry trade (interest arbitrage in a currency pair between credit/deposit rates of banks).
Even more large investors would have withdrawn their capital from the American market, because everyone takes into account the inflation of both countries and the course of monetary policy.
If Japan does not raise the rate anymore, and the Fed does not lower it in September, then most likely a fall for this reason can be excluded.
So now you understand why both a Fed rate cut and a recession will still cause markets to cascade down at some point.
