Recent market data shows that the Fed's interest rate cut expectations are at historically high levels. The probability of a 25 basis point cut in October has exceeded 87%, while the likelihood of a cumulative 50 basis point cut in December is around 65%. These numbers hide several important signals worth following.

Firstly, the market focus has shifted from "whether to cut interest rates" to "the extent of the rate cut." Investors generally expect a rate cut in October, with the real suspense being whether a second rate cut will occur in December. About 65% probability reflects the market's strong expectation of an economic slowdown, but if subsequent economic data fails to confirm this trend, the gap between expectations and reality may trigger market volatility.

Secondly, the market seems to have reacted in advance to the expectations of interest rate cuts. The recent recovery of the US stock and cryptocurrency markets is largely a preemptive response to the expectations of improved liquidity. However, historical experience shows that when interest rate cuts are actually implemented, there is often a "buy the expectation, sell the news" situation, so caution is needed when chasing prices at this time.

For ordinary investors, blindly following market sentiment to enter the market may pose a high risk. A wiser approach is to follow the core indicators of Fed decisions: whether inflation data continues to decline and whether the employment market shows a significant cooling. These two indicators are the key factors determining the pace of interest rate cuts, rather than the optimistic sentiment of the market.

The upcoming two FOMC meetings (October 29 and December 10) will serve as important observation windows. Not only will this determine the direction of interest rates, but it will also validate or break the current market's optimistic expectations. At a critical moment when liquidity expectations may change, rather than chasing short-term gains, it may be a more prudent investment strategy to maintain sensitivity to economic data and vigilance against market risks.