Economist sees 'sell the news' event with Fed's anticipated 25 basis point rate cut

A possible 25 basis point rate cut by the US Federal Reserve next Wednesday is already priced in by markets and could lead to a "sell the news" event for risk assets, according to a leading economist.

"The market is already pricing in a 25 basis point cut, meaning the actual cut could be disappointing and trigger a sell-the-news reaction. In contrast, a 50 basis point cut is not priced in. If it were to materialise, it would likely give the market a boost," said Johns Hopkins University economist Steve Hanke.

Ahead of the Federal Open Market Committee (FOMC) meeting on September 18, CME’s FedWatch tool indicates that interest rate traders are pricing in a 57% chance of a 25 basis point cut and a 43% chance of a 50 basis point reduction. Notably, interest rate traders have significantly increased the odds of a 50 basis point cut, with the probability rising from 13% to 43% over the past 24 hours.

Hanke, who previously ran Toronto Trust Argentina in Buenos Aires (the world’s best-performing fund in 1995), added that risk assets, including bitcoin, could face increased volatility in the coming months, in the run-up to the US presidential election on November 5. Given the uncertain market conditions, he expressed a preference for fixed-income investments, such as the 10-year US Treasury bond and gold. #BTC☀ #Bitcoin❗ #HotTrens #BinanceSquareFamily #BinanceEarnProgram $BTC