Markets are heading into FOMC week with U.S. yields sliding lower and expectations of a 25 bps rate cut nearly locked in. The Senate’s confirmation of Stephan Miran, a Trump-aligned economist, to the Fed has sparked debate about central bank independence. Meanwhile, Treasury continues its activist issuance strategy, flooding the market with short-term bills. While RRP balances sink further, this reflects a liquidity shift, not a crunch, as funds move into T-bills and bank reserves. Against this backdrop, equities, crypto, and precious metals are supported by lower funding costs and rate-cut optimism.
- Fed politics: Stephan Miran joins FOMC, raising independence concerns.
- Liquidity dynamics: RRP decline = liquidity shift into bills/reserves, not a crunch.
- Rates: Lower yields and an expected Fed cut boost risk sentiment.
- Trade: Trump positive on U.S.–China TikTok deal, improving outlook.