On September 19, QCP Capital revealed via its official channel that the Federal Reserve has enacted a 50 basis point rate reduction and intends to implement two more interest rate cuts this year, followed by four in 2025. While Chair Jerome Powell was non-committal about future rate cut specifics, upcoming labor statistics may provide further guidance. Since July 2022, the recessionary indicator, the US 2-year/10-year Treasury spread, has been inverted but recently ticked up to +8 basis points, signaling increased market confidence and a pivot towards higher-risk assets.
Despite an attempt by the S&P 500 to reach new highs, it ultimately declined after the recent FOMC meeting. In the options market, implied volatility plummeted post-meeting, with Bitcoin’s volatility decreasing by 19 basis points and Ethereum’s by 18 basis points. Following the FOMC’s announcement, Bitcoin spiked from $59,000 to $62,000. We anticipate a resurgence in volatility leading up to the subsequent FOMC meeting and the US presidential election.