Federal Reserve did not alter the pace of quantitative tightening (QT) in the latest FOMC statement, though there have been interesting Treasury buyback operations by the Treasury that may come up in Powell's press conference

The Fed statement removed reference to export-related noise from tariffs and instead focused on the weakening jobs market, with the balance of risks now shifted toward employment protection over inflation

The Fed dot plot shows median expectations for two more 25-basis-point cuts by end of year, with 9 members calling for two more cuts, 6 calling for no more cuts, and 1 outlier calling for 5 more cuts

Market implied probabilities shifted dramatically after the FOMC statement: October meeting probability jumped from 74% to 93% for a cut, and December probability jumped from 70% to 92% for having two additional cuts by then

The US dollar sold off hard post-FOMC, taking out the April lows, though it is regaining some ground; dollar weakness is a key pillar of the risk asset rally and the dollar getting oversold could set up for footing and correction

David Rosenberg documented that any time the Shiller CAPE ratio exceeded 35, subsequent 1, 3, 7, and 10-year returns were negative without exception in history; current levels are well above 35

In 2000 and 2008, the Fed dramatically cut rates yet the S&P 500 crashed anyway, showing that rate cuts are not a panacea and cannot prevent corrections when fundamentals deteriorate

When unemployment rate bottoms and starts rising, and Fed cuts rates, that pattern has historically preceded recessions in 2000, 2008, and is repeating now in 2025; meaning markets ignoring this is unusual

The Treasury is performing increased 'liquidity enhancement operations' where it buys back long-term bonds while issuing short-term debt, effectively managing maturity structure rather than actually reducing debt, playing games with duration

Treasury buyback operations have increased dramatically, with the Treasury buying back longer-term bonds while issuing more short-term debt to fund those buybacks—this is not QE but rather a maturity-extension operation that supports short-term rates

Unemployment rate is a lagging indicator that turns up sharply near the end of recessions, and recent upticks in unemployment have paralleled historical recession patterns; when unemployment bottoms and turns up, markets typically have already suffered significant decline

The Fed statement removes reference to tariffs and shifts language to emphasize that the balance of risks toward employment has shifted, implying the Fed will prioritize employment over inflation and tolerate higher inflation as a consequence

In 2000 and 2008-09 tech bubble and housing crash, the Fed slashed rates dramatically in panic fashion yet it did nothing to prevent market collapses, showing that rate cutting stimulus is not effective in stopping corrections when the underlying fundamental breaks occur.

Stock market whipsawed on Fed announcement with initial spike higher then pullback, bond yields spiked lower then backed up again, and dollar sold off hard taking out April lows before regaining some ground

Fed dot plot shows only 6 members calling for no more rate cuts for remainder of year, while 9 members expect two additional 25 bps cuts by year-end, and 1 member expects five additional cuts—showing consensus for easing is stronger than markets had priced

The Schiller CAPE ratio (cyclically adjusted P/E) exceeding 35 has historically predicted negative buy-and-hold returns on 1, 3, 7, and 10-year forward bases; current valuation is well above 35 and indicates poor expected forward returns regardless of near-term price action