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Bond traders once again believe that Federal Reserve policymakers are more likely to cut interest rates by 50 basis points than 25 basis points at this week's meeting. Swaps linked to the Fed's interest rate resolution show a more than 50 per cent chance that the Fed will cut rates by 50 basis points this week, compared with last week when traders almost completely ruled out the possibility. That sent two-year U.S. American yields back to their lowest level in two years and dragged the dollar index to its lowest level since January. Philip Marey, senior U.S. strategist at Rabobank, wrote that he expects the Fed to implement its standard 25 basis point rate cut. ‘Powell's lack of guidance could indicate that the FOMC has yet to reach consensus. More importantly, Tuesday's retail sales could still alter market expectations.’

On 16 September, André Dragosch, Head of European Research at Bitwise, said, ‘The relatively strong manufacturing report suggests that the market's reaction could be positive if the Fed cuts interest rates by 50 basis points, as this leading indicator has already shown even an acceleration in underlying economic momentum in September, signalling a possible entry into the early stages of the “just right scenario”, i.e. low inflation, stable growth, and stimulative monetary policy.   In my view, markets will be driven more by expectations of a rate cut than the cut itself over the next few months.   Expectations of further rate cuts are likely to intensify due to the weak US economy and impending recession, which we expect to have a net positive impact on Bitcoin and crypto assets.’