Market Analysis: The Federal Reserve may disappoint extremely dovish investors

ChainCatcher news, investors are betting that the Federal Reserve will make a significant rate cut this week, but they are likely to be disappointed as the performance of the U.S. economy does not warrant aggressive rate cuts.

According to CME's FedWatch Tool, current U.S. interest rate futures prices show a 65% chance of a 50 basis point cut and a potential total cut of 116 basis points this year. However, a series of economic data released on Tuesday prompted the Atlanta Fed to raise its forecast for U.S. GDP growth in the third quarter from 2.6% to 3.0%, indicating that the economy is not as bad as it seems. After weighing all factors, the Fed may cut rates by 25 basis points, and Powell may reiterate a data-dependent approach. The Fed's dot plot is unlikely to confirm the current aggressive pricing for rapid rate cuts, but rather show a more measured pace of rate reductions. This could be interpreted as a "hawkish cut," forcing investors who hastily bet on significant rate cuts to cover their positions. (Jin Shi)