Two themes shaping Q4 markets
- The US Federal Reserve made a cautious interest rate cut in September, signaling a gradual easing cycle with further cuts likely to follow if labor market weakness persists. The Fed is expected to pivot to a more dovish stance by year-end, which could weaken the US dollar and boost equity markets.
- Following the passing of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, stablecoins, mostly pegged to the US dollar, are projected to grow significantly. However, their impact on the US dollar and Treasury markets will remain limited due to their relatively small capitalization as well as US government’s support for dollar-backed stablecoins over CBDCs restricting stablecoins’ international growth.
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