The Federal Reserve makes a significant announcement late at night! A decade-long upheaval in global capital is coming, where should you put your money?

At 2 a.m. Beijing time on September 18, the decisions made in the basement of the Federal Reserve's Eccles Building will affect every investor worldwide. The tense atmosphere in the New York trading floor has already spread to the dinner table conversations of ordinary families.

01 Historical Review: Asset Performance Patterns During Interest Rate Cuts

Historically, the impact of the Federal Reserve's interest rate cuts on various assets has shown patterns. Quickly understand the typical performance of major assets during past rate cut cycles through a table:

U.S. stocks: A dramatic reversal after an initial decline.
At the beginning of interest rate cuts, the market is often concerned about economic recession, corporate profit expectations are adjusted downward, and the stock market may continue to explore the bottom.

However, as we enter the later stages of the rate cut cycle, with liquidity continuing to be released, market panic gradually recedes, and the effects of lower funding costs begin to show. Abundant "cheap money" will seek higher-yielding assets, highlighting the attractiveness of the stock market, thus initiating a new upward trend.

Gold: The "King of Safe Haven" Boosted by Triple Forces
Gold is often one of the biggest beneficiaries during a rate-cutting cycle. Firstly, the opportunity cost decreases: as a non-yielding asset, gold's appeal significantly increases when interest rates decline. Secondly, the US dollar weakens: rate cuts usually lead to a depreciation of the dollar, and the price of gold, priced in dollars, rises accordingly. Thirdly, there is a demand for safe-haven assets: rate cuts are often accompanied by economic uncertainty, and gold's safe-haven properties are fully realized.

Emerging Markets: The Biggest Beneficiaries of the Dollar Flood
A rate cut by the Federal Reserve typically leads to a weaker dollar and improved global liquidity, which encourages capital to shift from the United States to emerging markets with higher yields.

Historical data shows that during the "preemptive rate cut" cycles of 1995-1996 and 2019, interest rate-sensitive technology growth sectors and small-cap stocks performed outstandingly.

02 Background of this interest rate cut: An unusually complex situation

The "dual personality" of economic data
The current U.S. economy presents a complex picture of "slowing growth and persistent inflation."
The job market has clearly deteriorated: the unemployment rate rose to 4.3% in August, with only 22,000 new non-farm jobs added, marking a near four-year low. Even more concerning is that the U.S. Department of Labor has made a historic downward revision to previous employment data, cutting the total number of new jobs by 911,000.
Inflation remains sticky: In August, the CPI rose 2.9% year-on-year, and the core CPI rose 3.1% year-on-year, still above the Federal Reserve's target of 2%.

"Unprecedented" political pressure
U.S. President Trump has recently been pressuring the Federal Reserve frequently, demanding "significant and rapid interest rate cuts," even explicitly stating that the cuts should be "beyond expectations." He has also tried to influence the Federal Reserve through personnel appointments, and the political uncertainty surrounding whether his nominated board candidate Stephen Miran will be able to vote and the status of board member Lisa Cook adds to the uncertainty of the meeting.

03 Tonight's expectation: A 25 basis point rate cut is almost a certainty.

The market generally expects the Federal Reserve to cut interest rates by 25 basis points at this meeting, lowering the target range for the federal funds rate from 4.25%–4.50% to 4.00%–4.25%. According to the Chicago Mercantile Exchange (CME) "FedWatch" tool, the market expects a 96.4% probability of a 25 basis point rate cut by the Federal Reserve.

But three key points are more important than the rate cut itself:
1. The dot plot path: It will reveal officials’ expectations for interest rates at the end of 2025 and beyond, and the market hopes to find clues from it on whether the Federal Reserve hints at continuing to cut rates in the future.
2. Economic Forecast Update: The Federal Reserve will update its estimates for economic growth, inflation, and unemployment rates. Given that the Congressional Budget Office has revised its economic growth forecast for this year down to 1.4%, while raising expectations for inflation and unemployment rates, it is important to pay attention to how the Federal Reserve assesses the economic outlook.
3. Powell's Tone: The remarks of Federal Reserve Chairman Powell at the press conference are crucial—does he emphasize the "preventive" nature of interest rate cuts, or does he express concern about the economic outlook?

04 Market Impact: How to Allocate Global Assets?

If it meets expectations (25 basis points cut + dovish statements)
U.S. stocks: may surge in the short term, but technology stocks [$NASDAQ:IXIC] and small-cap stocks [$RUSSELL:RUT] that are sensitive to interest rates will benefit the most.
Gold: Further increases are possible, with a breakout above $3700/ounce [$GOLD] being the short-term target.
Emerging markets: The Hong Kong stock market [$HSI] and Asian sovereign bonds are expected to see inflows of capital.
Cryptocurrency: Bitcoin [$BTC] may test previous highs again, as expectations of improved liquidity boost risk assets.

If it exceeds expectations (cut interest rates by 50 basis points)
The market may interpret that the economic outlook is worse than expected, and panic sentiment may first lead to a decline in the stock market, which may then rebound driven by liquidity.

If unexpectedly "hawkish" (only a 25 basis point cut and hinting at a stop)
The market may undergo a significant correction, the US dollar is strengthening, and gold and emerging markets are facing short-term pressure.

05 Practical Advice for Ordinary Investors

1. Avoid chasing highs: The market has partially priced in the expectation of interest rate cuts, be wary of the trend of "buying the expectation, selling the fact" reversing.
2. Long-term allocation: During a rate-cutting cycle, gold and high-quality growth stocks are usually better long-term allocation choices.
3. Diversified Investment: Do not bet on a single asset; a balanced portfolio of stocks and bonds plus gold hedging is the ideal strategy at present.
4. Pay attention to A-share opportunities: The Federal Reserve's interest rate cuts open up space for China's monetary policy, and the A-share technology sector [$BK:CN:STAR50] and Hong Kong technology sector [$HSTECH:HSI] are worth noting.

The interest rate decision will be announced at 2:00 AM Beijing time on September 18, followed by a press conference by Powell at 2:30. This unprecedented global capital upheaval in a decade is about to unfold.

Disclaimer: The above analysis is only a整理 of market information and does not constitute any investment advice. The market carries risks, and investments should be made cautiously. #BTC战略储备市场影响 #美联储降息预期升温