Employment data remains weak, and the market is beginning to bet on the Federal Reserve implementing more aggressive rate cuts. If the Fed indeed cuts interest rates by 125 basis points to the 2.25% level as expected, what will this policy shift bring?

From a market perspective, a rate cut cycle often releases a large amount of liquidity. Lower borrowing costs mean funds seek higher-yielding channels — this provides clear support for stocks, bonds, and even cryptocurrencies. Although the shrinking employment market itself reflects economic pressure signals, expectations of easing policies are enough to reverse market sentiment in the short term.

In other words, the Fed's rate cut signals may drive risk assets higher more than the pessimistic significance of the employment data itself. In a liquidity-rich environment, markets tend to bet on economic recovery expectations rather than overly worry about current employment difficulties. For traders tracking policy signals, this potential 125 basis point cut is undoubtedly a noteworthy turning point.