Odds of a rate cut in December in the U.S. increase to 71%

Source: CritpoTendencia Original Title: The odds of a rate cut in December in the U.S. rise to 70% and this is the reason Original Link: This Friday, the odds of a rate cut or interest rate reduction by the Federal Reserve of the United States in December increased significantly. This comes after the statements from the president of the New York Fed, John Williams, who stated that current conditions justify a loosening of monetary policy.

His words reactivate market optimism in light of the possibility of a new 25 basis point cut. The message arrives at a critical moment, as financial markets face a wave of massive liquidations due to fears that the central bank will keep the rate unchanged at its next meeting.

This Thursday, the data for new non-farm payrolls for September was released, which came as a strong setback for investors. While projections pointed to 50,000 new jobs, the actual figure reached 119,000. Technically, this rebound in job creation reduces the urgency to move forward with further rate cuts.

A freeze on the cutting process would be profoundly negative for risk assets such as cryptocurrencies. This would prolong the high interest rate environment, a scenario that limits economic growth and especially affects publicly traded companies.

This is where Williams' statements become relevant, as they reactivate the possibility of a rate cut at the next meeting of the Federal Open Market Committee (FOMC). According to the CME Group's FedWatch tool, the probability rises to 71%.

Williams revives hopes for a rate cut in December

Williams' statements provide an immediate shift in market sentiment regarding monetary policy. To gauge this change, it is enough to remember that this Thursday the probabilities had fallen to 33%. The non-farm payroll report triggered an almost automatic collapse in the price of Bitcoin.

The pullback of the largest cryptocurrency quickly spread to the rest of the risk assets. Tech stocks also suffered sharp declines, despite the strong quarterly results of leading tech companies, which initially generated positive expectations.

As a result, investors moved away from risk assets, leaving the main Wall Street indices in negative territory on Thursday. This Friday, Bitcoin fell sharply again, dangerously approaching the key support level of $80,000.

This scenario highlights the relevance of the message issued by Williams during his participation in the centennial conference of the Central Bank of Chile. The official pointed out that, in his view, there is room to adjust the range of the federal funds rate towards a more neutral point, always within the balance between the two mandates of the Federal Reserve.