When will the Federal Reserve lower interest rates?!?

Recently, U.S. economic data has remained strong, with 177,000 new non-farm jobs added in April, significantly higher than the market expectation of 130,000. The unemployment rate has stabilized at 4.2%, lower than the Federal Reserve's expectation of 4.4% by the end of the year, indicating that the U.S. job market remains resilient. As a result, there is no pressing reason for the Federal Reserve to cut interest rates in the short term, and rates may remain high. The dollar index has also stayed above 100 recently, which means Bitcoin is still facing significant pressure in the short term, and the market may continue to oscillate at high levels.

On the other hand, U.S. corporate earnings reports have recently outperformed expectations. About two-thirds of the companies in the S&P 500 index have disclosed their earnings, with overall profits exceeding expectations by about 7%, far higher than the long-term average of 4.3%. Tech giants Microsoft and Meta have seen their stock prices rise significantly due to favorable earnings reports, which has also driven a sustained rebound in U.S. stocks, with the Dow Jones Industrial Average setting a record for the longest nine-day winning streak in nearly a year. At the same time, the well-known stock market valuation tool, the 'Buffett Indicator', has fallen to its lowest level since September 2024, indicating that U.S. stocks are currently at a relatively cheap level, and investor confidence is beginning to recover. A strengthening stock market is generally accompanied by an increase in risk appetite, which also provides potential support for Bitcoin's rise in the future.

However, the actual breakthrough in Bitcoin prices in the future depends on the timing of the Federal Reserve's interest rate cuts. In the future, we need to closely monitor two key data points:

First is the inflation data. If the monthly CPI data clearly falls below 2.5%, such as if the CPI for May or June is reported at 2.4%, this would signify a relief in inflationary pressures and open up space for the Federal Reserve to lower interest rates.

Second is the signal of weakness in employment data. Suppose in a future month, non-farm payrolls fall below 100,000, for example, if the non-farm payrolls for July are only around 80,000, while the unemployment rate rises to 4.5% or even higher, this combination of data would significantly enhance the urgency for the Federal Reserve to cut interest rates.

Considering the current economic trends and market expectations, although the probability of a rate cut in June has significantly decreased, mainstream analytical institutions (such as Goldman Sachs and Barclays) generally expect the Federal Reserve to possibly initiate its first rate cut between late Q3 of this year and between July and September 2025. Currently, maintaining a low position in spot trading for long-term holding is the best strategy.