The Fed is going to cut interest rates, but this time it may not be as simple as you think

Have you noticed any subtle changes in the U.S. job market recently? Fewer and fewer people are quitting voluntarily – the turnover rate has fallen to 1.8%, the lowest point since 2020. At the same time, the company’s layoffs are quietly increasing, close to a three-year high.

What does this mean? Wages can’t go up. Enterprises are no longer as frantically grabbing people as in the previous two years, and the bargaining power of migrant workers is weakening. For the Fed, this is exactly the signal they want to see - inflationary pressures are subsiding, and the reasons for rate cuts are becoming more and more sufficient.

But the problem is that CPI is still hovering in the range of 2.5%-2.7%, and it is still far from the 2% target. Even more tricky is the consumer side: Americans’ credit card arrears have exceeded $1.2 trillion, with an average interest rate of more than 20%. You read that right, it’s 20%. This means that more and more families are living on borrowing money.

For BTC and other risk assets, interest rate cuts are indeed positive. But don’t be too happy – when consumers are tightening their belts, the market’s affordability is fragile. What traders need most now is not aggressiveness, but more room for volatility.