{"id":31253,"date":"2025-09-26T05:51:36","date_gmt":"2025-09-26T05:51:36","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=31253"},"modified":"2025-09-26T05:51:36","modified_gmt":"2025-09-26T05:51:36","slug":"the-fed-sparks-a-fresh-market-rally","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/sv-eu\/learn\/the-fed-sparks-a-fresh-market-rally\/","title":{"rendered":"The Fed Sparks a Fresh Market Rally"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"559\" src=\"https:\/\/www.vtmarkets.com\/wp-content\/uploads\/2025\/05\/Ray-Yang_1408x768-1024x559.jpg\" alt=\"\" class=\"wp-image-21717\" srcset=\"https:\/\/www.vtmarkets.com\/sv-eu\/wp-content\/uploads\/sites\/10\/2025\/05\/Ray-Yang_1408x768-1024x559.jpg 1024w, https:\/\/www.vtmarkets.com\/sv-eu\/wp-content\/uploads\/sites\/10\/2025\/05\/Ray-Yang_1408x768-300x164.jpg 300w, https:\/\/www.vtmarkets.com\/sv-eu\/wp-content\/uploads\/sites\/10\/2025\/05\/Ray-Yang_1408x768-768x419.jpg 768w, https:\/\/www.vtmarkets.com\/sv-eu\/wp-content\/uploads\/sites\/10\/2025\/05\/Ray-Yang_1408x768.jpg 1408w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Since the start of Q3, market sentiment has seen a dramatic turnaround. Compared to the gloomy tone of H1, the third quarter has been filled with bullish surprises. Many asset classes have reached new record highs, and the resolution of tariff uncertainty and a dovish shift from the Fed has led to a rally that shows little sign of slowing. Instead, investors should be looking for the right opportunities within the euphoria.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Tariff Risks Fade, Markets Rebound Sharply<\/h2>\n\n\n\n<p>Q3 began with a wave of tariff letters from Trump\u2019s administration. Compared to the slow progress in Q2, Trump\u2019s aggressive pressure tactics forced countries with major trade imbalances with the US to accelerate negotiations. Within a month, most of the top ten deficit countries had reached preliminary trade agreements.<\/p>\n\n\n\n<p>While the terms varied, Trump\u2019s demands were consistent: greater market access for US goods, increased foreign investment in the US, and a united front against China.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"fr\" dir=\"ltr\">China\u2019s export dominance remains intact despite Trump\u2019s tariff barriers <a href=\"https:\/\/t.co\/42qSrybgte\">https:\/\/t.co\/42qSrybgte<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1970444757076725902?ref_src=twsrc%5Etfw\">September 23, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Countries meeting these conditions were spared further tariffs. Importantly, most industry-specific tariffs came with \u201cconditional\u201d clauses, and their impact was milder than expected.<\/p>\n\n\n\n<p>This clarity finally closed the curtain on the long-standing tariff drama that had haunted markets since April\u2019s sell-off. As the news stabilised, equities, particularly tech stocks, rebounded strongly, with major indices hitting new highs.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">The bubble that has formed in US Big Tech stocks over the past two years has further to run and investors should position for more gains, according to Bank of America strategists <a href=\"https:\/\/t.co\/Whd2VrzV0w\">https:\/\/t.co\/Whd2VrzV0w<\/a><\/p>&mdash; Bloomberg (@business) <a href=\"https:\/\/twitter.com\/business\/status\/1968983656002732364?ref_src=twsrc%5Etfw\">September 19, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Weak labour data added fuel to the rally, pushing the Federal Reserve to shift its stance and sparking a wave of renewed optimism.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Fed Cuts on Labour Weakness, Not Inflation<\/h2>\n\n\n\n<p>July\u2019s Non-Farm Payroll (NFP) numbers fell well below expectations, and previous months\u2019 figures were revised sharply lower. August data continued the trend of weakness. This wasn\u2019t a one-off. In early September, the Bureau of Labor Statistics revised down <a href=\"https:\/\/www.cbsnews.com\/news\/bls-jobs-revisions-annual-benchmark-decline-911000-biden-trump\/\">an entire year\u2019s worth of job growth<\/a> by an average of 76,000 jobs per month, further cementing expectations for Fed rate cuts.<\/p>\n\n\n\n<p>At Jackson Hole, Fed Chair Powell struck a dovish tone, reinforcing the view that the Fed is pivoting toward easing.<\/p>\n\n\n\n<p>Ahead of the September FOMC decision, markets had priced in a total of 75bps in rate cuts for the rest of the year. Ultimately, the Fed delivered a 25bps cut, bringing the benchmark rate to 4.00\u20134.25%.<\/p>\n\n\n\n<p>What made headlines was Trump\u2019s latest move: in early August, <a href=\"https:\/\/t.co\/Pg9lofNbdy\" target=\"_blank\" rel=\"noopener\" title=\"\">Fed Governor Kugler resigned<\/a>, allowing Trump to appoint a dovish ally, Miran, to the Board. Though concerns were raised about Fed independence, markets took the move in stride.<\/p>\n\n\n\n<p>Miran voted for a 50bps cut, making him the only dissenter in favour of an even deeper cut. If Trump continues appointing loyalists, the Fed could lean more dovish in the future but for now, no further action seems necessary.<\/p>\n\n\n\n<p>The latest dot plot showed a meaningful dovish shift compared to June. While support for three cuts this year fell short of a majority, it still represented a strong voting bloc (9 members).<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">The Federal Reserve&#39;s latest dot plot shows division is still evident among FOMC officials on the near-term outlook. <br><br>Eighteen officials predicted at least one rate cut in 2025, with one policymaker even projecting six cuts. <br><br>Just a single FOMC member saw no change in rates\u2026 <a href=\"https:\/\/t.co\/R9gZXGsRLE\">pic.twitter.com\/R9gZXGsRLE<\/a><\/p>&mdash; Yahoo Finance (@YahooFinance) <a href=\"https:\/\/twitter.com\/YahooFinance\/status\/1968428785516093474?ref_src=twsrc%5Etfw\">September 17, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Expectations for 2025 moved towards multiple cuts, suggesting the Fed remains cautious and is aiming for balance between inflation control and employment support.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Statement Shift: Labour Weakness in Focus<\/h2>\n\n\n\n<p>The Fed\u2019s statement was noticeably changed. References to net export volatility were removed. The description of a \u201cstrong labour market\u201d was revised to \u201cslowing job growth\u201d and \u201crising unemployment.\u201d This signalled that the Fed is more concerned about softening labour conditions than rising inflation.<\/p>\n\n\n\n<p>Although inflation has remained sticky, the Fed\u2019s language changed from \u201cincreasing inflation\u201d to \u201celevated and persistent.\u201d Powell downplayed tariff-related inflation concerns, stating that their impact was smaller than expected.<\/p>\n\n\n\n<p>In the updated Summary of Economic Projections (SEP), <a href=\"https:\/\/www.bea.gov\/news\/2025\/gross-domestic-product-2nd-quarter-2025-third-estimate-gdp-industry-corporate-profits\" target=\"_blank\" rel=\"noopener\" title=\"\">GDP forecasts for 2024 and 2025 were revised upward<\/a>, while unemployment and inflation projections remained stable. This suggests that the Fed sees limited downside risk under a looser policy.<\/p>\n\n\n\n<p>Powell called the rate cut a \u201cprecautionary\u201d move framed as a risk management strategy and hinted that further cuts may follow in the remaining two meetings of the year. Even as asset prices climb, and concerns of overheating emerge, the market is still underpinned by a strong easing bias.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Q4 Outlook: Opportunities and Risks Ahead<\/h2>\n\n\n\n<p>Looking to Q4, the Fed is expected to continue easing, but several factors warrant caution. Many other central banks have paused or slowed their own rate-cut cycles.<\/p>\n\n\n\n<p>The ECB, for example, may still cut once in Q4, but with inflation still above target and growth slowing, it may adopt a more cautious tone. The Bank of England is in a similar position, and sticky inflation may keep rates on hold.<\/p>\n\n\n\n<p>This divergence in policy paths could further weaken the USD, particularly as the Fed presses ahead with interest rate cuts. Meanwhile, although tariff tensions have eased, the pause in US-China tariff negotiations is set to expire on November 10. Whether this agreement will be extended or renegotiated remains to be seen.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"twitter-tweet\" data-width=\"500\" data-dnt=\"true\"><p lang=\"en\" dir=\"ltr\">&quot;We&#39;re in a very experimental phase of US-China negotiations,&quot; Rhodium Group director <a href=\"https:\/\/twitter.com\/RevaGoujon?ref_src=twsrc%5Etfw\">@RevaGoujon<\/a> says, adding: &quot;China is playing several different moves in all of this. It wants to really maximize concessions from the White House at this stage.&quot; <a href=\"https:\/\/t.co\/X7YshP31Ux\">pic.twitter.com\/X7YshP31Ux<\/a><\/p>&mdash; Yahoo Finance (@YahooFinance) <a href=\"https:\/\/twitter.com\/YahooFinance\/status\/1968411553859871209?ref_src=twsrc%5Etfw\">September 17, 2025<\/a><\/blockquote><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script>\n<\/div><\/figure>\n\n\n\n<p>Markets are currently in an exuberant mood, and this optimism may carry through Q4. However, unexpected data releases or event risks should not be overlooked.<\/p>\n\n\n\n<p>Investors would do well to stay focused on high-momentum assets like <strong>gold, US tech stocks, and cryptocurrencies<\/strong>, while looking for favourable entry points as volatility emerges.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-medium-font-size\">Actionable Insights: What This Means for Traders<\/h2>\n\n\n\n<p>The Fed&#8217;s easing bias and fading trade tensions are supporting risk assets, but divergence in global monetary policy could introduce new FX opportunities.<\/p>\n\n\n\n<p>A <strong>weaker USD<\/strong> driven by Fed rate cuts and continued easing could offer <strong>upside potential for EURUSD and GBPUSD<\/strong>, particularly if the ECB and BoE remain cautious.<\/p>\n\n\n\n<p>Watch for EURUSD retesting the 1.10\u20131.12 region and GBPUSD potentially reclaiming the 1.28\u20131.30 zone if US data remains soft and rate differentials narrow further.<\/p>\n\n\n\n<p>For commodities, a supportive backdrop for <strong>gold<\/strong> remains in play.<\/p>\n\n\n\n<p>The Fed\u2019s precautionary stance and rising global reserve demand for gold reinforce the case for $$3,700-3,800 targets by year-end.<\/p>\n\n\n\n<p>Crypto, too, stands to benefit. Fed dovishness and a weaker dollar could attract capital back into digital assets, particularly if macro volatility stays contained.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.vtmarkets.com\/trade-now\/\" target=\"_blank\" rel=\"noopener\" title=\"\">Create your live VT Markets account<\/a> and <a href=\"https:\/\/myaccount.vtmarkets.com\/login?_gl=1*d96fp5*_gcl_au*Njc1MzM0NjY0LjE3NTEzNTM4MTc.*_ga*MjA5ODA0NDIzNC4xNzI3OTE1ODQ1*_ga_J26NL1ZVX7*czE3NTczOTYxNzckbzgzJGcwJHQxNzU3Mzk2MTc3JGo2MCRsMCRoMA..*_ga_6XQ8153GYW*czE3NTczODczODQkbzE4MyRnMCR0MTc1NzM4NzM4NCRqNjAkbDAkaDA.*_ga_BG6LYEHPX1*czE3NTczODczODQkbzEzMSRnMCR0MTc1NzM4NzM4NCRqNjAkbDAkaDA.*_ga_7CG6454YR5*czE3NTczODczODQkbzEzMSRnMCR0MTc1NzM4NzM4NCRqNjAkbDAkaDA.*_ga_J8BRGZSREX*czE3NTczODczODUkbzEzMSRnMCR0MTc1NzM4NzM4NSRqNjAkbDAkaDA.*_ga_69Z54R4H9N*czE3NTczODczODYkbzEzMSRnMCR0MTc1NzM4NzM4NiRqNjAkbDAkaDA.*_ga_CY2VCKFC3C*czE3NTczODczODYkbzEzMSRnMCR0MTc1NzM4NzM4NiRqNjAkbDAkaDA.*_ga_TXZ07R2C21*czE3NTczODczODYkbzEzMSRnMCR0MTc1NzM4NzM4NiRqNjAkbDAkaDA.*_ga_17TMGY9BBE*czE3NTczODczODgkbzEzMCRnMCR0MTc1NzM4NzM4OCRqNjAkbDAkaDA.*_ga_2QCC3S2748*czE3NTczODczODgkbzEyOSRnMCR0MTc1NzM4NzM4OCRqNjAkbDAkaDA.*_ga_MWDVVSEVL5*czE3NTczODczODgkbzEyOSRnMCR0MTc1NzM4NzM4OCRqNjAkbDAkaDA.*_ga_EJCVQDC7VT*czE3NTczODczODkkbzEyNSRnMCR0MTc1NzM4NzM4OSRqNjAkbDAkaDA.*_ga_XJ4037XKK6*czE3NTczODczOTEkbzEyNCRnMCR0MTc1NzM4NzM5MSRqNjAkbDAkaDA.*_ga_E7D2PCX624*czE3NTczODczOTEkbzEyMyRnMCR0MTc1NzM4NzM5MSRqNjAkbDAkaDA.\" target=\"_blank\" rel=\"noopener\" title=\"\">start trading<\/a> now.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Market sentiment has seen a dramatic turnaround since Q3. Compared to the gloom of H1, the third quarter has been filled with bullish surprises. &#8211; vtmarkets.com<\/p>\n","protected":false},"author":5,"featured_media":27919,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[52],"tags":[53],"class_list":["post-31253","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-learn","tag-learn"],"acf":{"acf_article_selection_author":""},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts\/31253","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/comments?post=31253"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/posts\/31253\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/media\/27919"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/media?parent=31253"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/categories?post=31253"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/sv-eu\/wp-json\/wp\/v2\/tags?post=31253"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}