CME tool data has exploded—the probability of a 25 basis point rate cut in December has shot up to 87%. This wave of agitation on Wall Street is not without reason.

Employment data has completely collapsed. Nonfarm payrolls in September only increased by 119,000, and Goldman Sachs went even further, estimating just 39,000. Youth unemployment is spiking, with some saying this is a sign that AI is starting to eliminate jobs. The market is betting on a rate cut, but there’s still infighting within the Fed—October meeting minutes revealed two camps: one saying “pause and observe,” the other pushing for an “aggressive rate cut.” The short-term direction is clear, but the real issues come later.

2026 is the true foggy zone. Goldman Sachs predicts a “pause then cut” strategy, but will inflation really cool down? How long can employment pressure hold? Everything is uncertain. What’s even more critical is the timing: Powell’s term ends in May 2026, and Trump’s camp is already eyeing Kevin Hassett. This guy’s stance is straightforward—“cut rates immediately,” perfectly aligning with the White House’s preferences.

But the market isn’t buying it. PGIM directly warned of a “lack of consensus and credibility,” and Gavekal was even harsher: “If the Fed and Treasury are in cahoots, Treasuries will collapse.” If independence is compromised, no one dares imagine the consequences.

The chairmanship is up in the air, inflation data is conflicting, and employment structure is changing. A short-term rate cut is a sure thing, but long-term policy remains a mystery. The Fed now stands at the crossroads of data and politics, with global markets waiting for an answer. Who will take the wheel of monetary policy? Will a rate cut lead to recovery—or a new crisis?

Until the suspense is resolved, another storm could break out at any moment.