Capital Flows Out of the US After FED

Group 1: Federal Reserve Actions - The Federal Reserve is expected to lower interest rates by 0.25 percentage points, with three out of ten members voting against this decision [1] - Jerome Powell confirmed another rate cut is anticipated in 2026, after which the FED may pause, focusing on inflation as the employment situation appears stable [1] Group 2: Market Reactions and Currency Dynamics - Traders are beginning to factor in the dovish stance of the new FED president Kevin Hassett, who suggested there could be more than three rate cuts [2] - Major currencies like the Euro and Yen are influenced by hawkish narratives compared to the US dollar, with German 30-year bond yields reaching new peaks [2] Group 3: Bond Buybacks and Market Liquidity - The FED announced monthly buybacks of short-term bonds (T-bills) amounting to $40 billion, which is expected to lower real interest rates and enhance market liquidity, positively impacting stocks, metals, and cryptocurrencies [3] Group 4: Commodity and Cryptocurrency Performance - US stock indices are struggling to maintain momentum, while metals have rallied significantly, with Gold surpassing $4300 and silver reaching new historical highs [4] - Bitcoin is facing challenges in maintaining momentum, trading within a narrow range of $92,000 to $93,000, following substantial outflows from Bitcoin ETFs [4] Group 5: Capital Flows and Investment Opportunities - The primary narrative driving capital flows favors European assets over US assets, with Chinese stocks also attracting significant investment as hedge funds prepare for a potential rally [5] Group 6: European Market Outlook - The DAX index is poised for a breakout from a consolidation pattern established since June 2025, with German bond yields at new peaks and inflation steady at around 2.3% [6] - European stocks are viewed as a balanced investment choice amid pressure on the US dollar and an overheated AI sector, with the DAX expected to test the 20-day moving average before any new peaks [7]