The Fed has been thoroughly torn apart! The recently released minutes from the October meeting caught the market off guard— the possibility of a rate cut in December plummeted from 58% to 31.8% within a week, directly experiencing a 50% Slump. The US dollar index took the opportunity to break through 106, and the 30-year mortgage interest rate surged to 7.8%. Your Wallet and investment account can’t escape this time.

The contradictions have been laid bare. The hawks firmly insist: inflation has not been curbed yet. Core PCE is stuck at 2.8%, still far from the 2% target, and the geopolitical situation is pushing up oil prices. Now to cut interest rates? The past two years would be in vain. On the dove side, they are getting anxious: the manufacturing PMI has contracted for three consecutive months, and corporate loan costs have soared to 2008 levels. If this continues, what will happen if the unemployment rate breaks 4%?

The vote in October was even more extreme: 10 votes agreed to a 25 basis point cut, but the 2 opposing votes stood on completely opposite ends—one wanted a direct cut of 50 basis points, while the other insisted on leaving it unchanged. This level of disagreement is unprecedented.

What's worse is that the Fed is now making decisions blindly. The Labor Statistics Bureau suddenly announced the cancellation of the October non-farm report, which will be merged and released on December 16. However, the last interest rate meeting of the year is on December 11. With key data missing, officials can only vote based on their instincts.

The balance sheet reduction also needs to hit the brakes in advance. Starting in December, the reduction of Treasury and MBS holdings will stop - this round of balance sheet reduction has already cut over $2.5 trillion, and now there are concerns that bank reserves are insufficient, fearing it may trigger market turbulence.

The market has panicked ahead of time. The Dow Jones has fallen over 300 points, the Nasdaq has plummeted 1.8%, and the yield on the 10-year U.S. Treasury bond has reached its highest level since 2007. The central parity rate of the RMB has been adjusted down by 218 points to 7.3156, and the euro and pound have collectively plummeted. Ordinary people are feeling the impact more directly: the annual interest rate on credit cards has skyrocketed to 20.7%, and monthly mortgage payments are 30% higher than last year. A leading investment bank has already advised clients to overweight short-term government bonds and steer clear of growth stocks and real estate.

Powell is now dancing on the edge of a knife. Internal conflicts are splitting, data is missing, and financial risks must be guarded against — private credit is facing a series of explosions, stock market valuations are hanging high, and hedge fund leverage is climbing. Next, we will look at the non-farm payroll and CPI data in December. But before that, market volatility will only become more intense. The cryptocurrency market cannot remain unaffected either; the tightening of U.S. dollar liquidity impacts risk assets, regardless of whether they are traditional finance or on-chain assets.