The turmoil is testament to just how much faith markets were putting in a steady stream of policy easing to buoy asset prices. Now, with officials predicting just a pair of rate cuts over the next 12 months, those hopes have been all but dashed, and investors have been left to pick up the pieces and figure out where to go from here.
Almost exactly one year after sparking a furious rally in financial markets, Federal Reserve Chair Jerome Powell did the exact opposite on Wednesday, staking out a cautious view on interest-rate cuts in 2025 that stunned investors.
Stocks tumbled 3% and bonds plunged too, sending yields on benchmark 10-year Treasuries to their highest in seven months. By the time Powell was done speaking, some 90 minutes after the Fed announced its third rate cut in a row, the selloff was the worst after a meeting since the onset of the pandemic and the message was clear: The go-go, risk-on rally of the past two-plus years is suddenly in peril.
