The Fed did what was expected: it cut rates by 0.25% ( BY 25 BPS TO 3.75-4%) for the second consecutive time and announced the end of the QT period—balance sheet reduction will officially stop on December 1. The balance sheet has already been reduced by over $2 trillion, and now it's on pause.

The statement emphasized the weakening labor market: "employment risks have increased," and "job growth has slowed." However, inflation is still "elevated," and economic growth is described as "moderate." Market data is limited, however—due to the shutdown, many releases have either not been released or are out of date.

The market reaction is muted: the S&P remains positive, yields and the dollar are higher. Powell's press conference will provide more nuance, but the gist is already clear: rates continue to be lowered, but not without a fight within the committee. And now, without the QT period, liquidity is back in focus.