The Fed’s recent moves are a textbook example of a sudden policy reversal. In early November, they were still putting on a tough act, saying there’d be no rate cuts. By late November, they softened up immediately, sending out all kinds of dovish signals. Let me be blunt—there’s absolutely going to be a rate cut in December. That 80%+ market expectation isn’t baseless; at this point, there’s basically no suspense left.

To be honest, this rate hike playbook wasn’t complicated. Over the past two years, the US has been aggressively raising rates to attract global capital flows into the country. The logic is simple: with higher US interest rates, who wouldn’t want to convert their currency into dollars and park it to earn interest? All this incoming capital didn’t just sit around—it flowed into the bond market and various financial institutions through the banking system, and directly pushed up US equities. While the global economy has been struggling, the US stock market has been soaring—which is essentially a fake prosperity propped up by draining the rest of the world’s capital.

But rate hikes have always been a double-edged sword. After two years, all the side effects are on full display: with rates so high, what real business dares to invest or expand? The economy has started to weaken, unemployment is climbing, and even the US itself is struggling to cope. Cutting rates? That’s a must.

What’s even more ironic is that the Fed originally planned to use high rates to crush a few small economies so they could scoop up high-quality assets at bargain prices when the time came to cut. But in the end? This round didn’t achieve that goal at all—instead, they’ve backed themselves into a corner. At this point, cutting or not cutting rates isn’t even a choice anymore.