The dovish voices within the Federal Reserve are becoming increasingly sharp. Officials like Milan have recently spoken out bluntly, stating that the current interest rate level of 3.5%-3.75% is dragging down economic growth, and a rate cut of over 100 basis points is inevitable this year. Some even advocate for a more aggressive approach, suggesting a one-time 50 basis point cut. These remarks carry extra weight given the current context—unemployment has already jumped to 4.6%, the highest in four years, and warning signs in the job market have long been flashing.

The January FOMC meeting is likely to keep rates unchanged, but the real focus is on the non-farm payroll data this Friday. This data will directly influence the probability of a rate cut in March.

The stock market is reacting swiftly. The Dow surged over 370 points in one go, breaking through the 49,360 level, with healthcare and technology sectors leading the rally. The semiconductor sector performed the strongest, with SanDisk soaring 20% to hit a new all-time high, while Nvidia and Micron also followed suit. In contrast, oil prices fell nearly 1%, due to the U.S. intentionally unlocking Venezuela’s oil capacity, with market expectations of a surplus in the oil market by 2026.

On the crypto side, the situation is a tale of two extremes. Wall Street giants like Morgan Stanley quickly filed ETF applications for Bitcoin and Solana, indicating that institutional capital is accelerating its deployment. However, Bitcoin itself dropped 1.5%, stuck at the $92,000 mark, mainly because a "Bitcoin treasury" lost $17.44 billion, raising concerns that it might sell off to cut losses. This uncertainty temporarily dampened upward momentum.

How the story unfolds next depends on the big test of the non-farm payroll data. When exactly to loosen the monetary policy remains a question mark, and all market participants are holding their breath.