Investors Brace for Fed Rate Cut on Sept. 17: Short-Term Turbulence, Long-Term Rally for Bitcoin, Gold, and Stocks

Markets Eye Fed Rate Cut: Short-Term Volatility Likely, Longer-Term Gains Possible

Investors are bracing for the Federal Reserve’s Sept. 17 decision, expected to deliver a 25-basis-point rate cut. While markets may experience short-term swings, historical trends suggest Bitcoin, gold, and equities could benefit over the longer term.

August’s CPI report showed consumer prices rose 0.4%, lifting annual inflation to 2.9%, while core CPI increased 0.3%. Producer prices remained elevated, with core PPI up 2.8% year-over-year—the largest annual gain since March.

Labor market growth is slowing: nonfarm payrolls rose just 22,000, unemployment held at 4.3%, and labor force participation stayed at 62.3%. Wage growth remains steady, with average hourly earnings up 3.7% year-over-year.

Bond markets reflect cautious expectations, with the 2-year Treasury at 3.56% and the 10-year at 4.07%. CME FedWatch assigns a 93% probability to a 25-basis-point cut.

Equities remain near record highs: the S&P 500 at 6,584 and Nasdaq achieving five consecutive record closes. Bitcoin trades near $115,234, and gold approaches $3,643 per ounce.

Historical precedent shows short-term volatility often follows rate cuts, but long-term gains for risk assets are common, supporting cautious optimism ahead of Sept. 17.