The market is currently pricing in a 100% chance that the Fed will cut interest rates next week.

The global financial market is entering a sensitive “phase transition”: all eyes are on the Federal Reserve of America (Fed), as the market has now priced in a 100% chance that the Fed will be cutting down the whales in the next meeting. But the noteworthy point here is not whether the Fed will cut or not, but the message and the consequences behind that decision.

1. When expectations replace uncertainty When the market has priced in a move at 100%, it means that all unexpected factors have disappeared. No more “if” — only “when”. In that context, the real shock is not the decision to cut, but what the Fed will do and say afterward. Investors are no longer concerned about “how much to cut,” but are focused on the policy signals hidden behind that figure.
2. Cutting down the whales does not mean pumping liquidity This is the point where most individual investors often get confused. Lowering interest rates is just a change in the cost of capital – it does not guarantee that liquidity will be injected. The liquidity of the financial system comes not only from interest rate policies but also from the intrinsic operational structure of the monetary system, including: Bank Reserves ( – the amount of money that banks hold at the Fed. Repo Market ) – a short-term borrowing mechanism between financial institutions. Credit Spreads ( – a measure of credit risk and confidence in the capital markets. These three factors are the real “lifeblood” of liquidity. And sometimes, interest rates may fall but liquidity is sucked out — especially when the U.S. Treasury )TGA( increases reserves or the Fed pulls money through the ON RRP tool )Overnight Reverse Repo(.
3. From “liquidity-driven policy” to “policy driven by liquidity” In previous cycles, the Fed was at the helm: monetary policy led, liquidity followed. But now, the roles have reversed. It is the market and the flow of money that are signaling, while the Fed only reacts to the fluctuations they have to accept. When liquidity narrows, credit tightens, and long-term yields remain high, the Fed has little choice but to “chase” the market to avoid defaults or systemic risks.
4. Trader's strategy: don't chase the news, look at the flow of money. For traders, this is no longer the time to “bet on news.” Instead, it is necessary to focus on 3 steps: Early valuation before the event occurs — because when the market has already expected 100%, most of the profits have been reflected in the price. Do not chase the short-term rally immediately after the interest rate cut announcement — the first reaction is often in the wrong direction. Monitor core liquidity indicators: ON RRP: if money flows out of here, liquidity is returning to the system. TGA: if the Treasury reduces the balance, it means liquidity is being released. Bank Reserves: if it increases, that is a signal that money is being pumped back into the economy. The money flow ) is more important than the Fed's statements.
5. The message behind the cutting level Cutting down the whales 25 basis points (bps) → “We are cautious and want to monitor more data.” Cutting down the whales 50 basis points (bps) → “We have fallen behind and need to act quickly.” The figure not only reflects policy but is also the language of psychology: the cutting down reflects the level of urgency that the Fed perceives regarding the risks of the system. Therefore, the difference between 25 and 50 bps is not in the direction, but in the tone – “cautious” or “worried”.
6. Conclusion: Policy creates the story, liquidity creates the trend In today's market, monetary policy is just the tip of the iceberg. The submerged part — where all asset price trends are determined — is the actual liquidity that is pumped out or withdrawn. When everyone is waiting for the interest rate cut, the game has really moved to the next stage: 👉 Will the Fed pump enough liquidity to activate the flow of money, or will it just “soothe” the market temporarily? Whatever the answer is, smart traders have taken a step ahead — because they do not trade based on news, but based on the flow of money that is flowing.