What does the Fed's December rate cut probability surge overnight mean? Historical trends and insights

① The rate cut expectation jumped from 30% to 65%, indicating that market consensus is shifting from "wait-and-see" to "certainty of easing," and the liquidity turning point may have arrived ahead of schedule.

② This rapid shift in expectations is often triggered by key macro signals: weakening employment data, declining core inflation, or dovish language from Fed officials.

③ Historically, when the probability of the first rate cut surpasses 50%, bond yields typically decline in advance, and tech stocks and gold see an average increase of over 15% within three months.

④ If at this time the US Dollar Index weakens and liquidity indicators improve, it means risk assets are entering the early stage of a "liquidity replenishment period."

⑤ In short: a doubling of rate cut expectations is not the result, but a signal of a market shift. It means "capital is repricing the future."

Some historical case references:

May 2019: Rate cut expectation rose from 40% to 70%, Nasdaq +12% three months later.

February 2020: Rate cut expectation surged, US Treasury yields hit a new low for the period, gold +18%.

October 2023: First rate cut probability surpassed 50%, BTC +40% in the following three months.