2025.12.28 Daily Report

Over the weekend, market liquidity further decreased, and the turnover rate also declined. BTC tried several times to break above $90,000 but was pushed back down each time.

Next week, there are no major macroeconomic data releases, except for the Federal Reserve meeting minutes on Wednesday.

According to forecasts from the Chicago Mercantile Exchange, most people expect the Federal Reserve to cut interest rates twice in 2026, in March and July, after which the benchmark rate will stabilize around 3%.

A report from Royal Bank of Canada (RBC) states that 3% is exactly the current neutral interest rate level in the United States.

This means that by the end of 2026, the Fed’s tightening policy will be completely over.

However, judging interest rate policies isn’t just about how many times rates are cut.

More importantly, what weapons does the Federal Reserve still have in its arsenal?

One is rate cuts. A 3% rate is not the bottom line; if the economy needs stimulation, the Fed can always continue to cut rates.

Another is new quantitative easing. The Fed has launched a “Reserve Management Plan,” which is equivalent to targeted market liquidity injections, with the latest monthly scale of $40 billion.

So we can see that the Fed currently has ample ammunition and remains calm. This creates a relatively favorable policy environment for US stocks.

If the Fed becomes anxious, it indicates an emergency situation. Remaining calm can actually be more deterrent.

An unhurried Fed can sustain a longer period of loose monetary policy, providing solid support for the market.

Will rising US unemployment rate affect the Fed’s rate cuts?

Federal Reserve Chair Powell has repeatedly hinted that the current policy focus is on “maintaining employment,” even at the expense of some inflation.

Therefore, changes in the labor market have a significant impact on the market.

The latest unemployment rate is 4.6%, the highest in nearly four years. But a closer look at the data shows this isn’t caused by large layoffs.

The US layoff rate (1.2%) remains at a historic low. The rising unemployment rate is more likely due to an increase in job seekers (an increase in labor supply).

Moreover, with Trump tightening immigration policies, the addition of new labor will decrease in the future.

Therefore, this kind of unemployment rate increase is unlikely to last. Currently, the US labor market is characterized by companies not hiring but also not laying off, remaining in a state of watchful waiting.

Coupled with the Fed’s “maintain employment” policy focus, the employment risk in 2026 isn’t that high, so the impact is limited.

With the Fed acting as a safety net, it’s very difficult for US stocks to collapse.

In the financial world, there’s a term called “Fed put options”: meaning that everyone believes as long as the stock market falls enough, the Fed will come out to rescue the market.

Because the Fed has no choice; the financial sector and the real economy are too tightly linked.

If the stock market drops 50%, it’s not just a matter of investors losing money; it will also lead to pension fund shrinkage, collapse of consumer confidence, disruption of corporate financing, and potentially large-scale unemployment.

The cost of this is unaffordable for any government.

Especially in 2026, a special year: in May, the Fed chair will change, and in late year, there will be Trump’s midterm elections.

Under this political logic, nothing can be more effective for a government than a thriving market.

Therefore, this implicit guarantee gives the market confidence. It tells all investors: you can buy boldly because the downside has been sealed off by policy.

If a major market correction really occurs, it’s not a sign of a crash, but a precursor to the Fed’s large-scale liquidity injection—a last chance for you to get on board.