Markets are excited about the Fed’s initial rate cut, but cuts don’t always bring an upsurge in risk markets. Historical data shows that while policy changes might not last long, they do trigger sales. So, what is the current status of stocks, crypto, oil, gold, and others? What challenges are investors facing?
Current Status of Stocks, Oil, and Gold
In its latest assessment, Fitch stated that the Fed’s rate cut cycle would be moderate and slow by historical standards. This isn’t good because markets expected a 100bp cut by the year’s end. Thus, a downward revision of expectations will also trigger another decline in risk markets. At the same time, Fitch did not change its assumptions about oil and natural gas prices.
Stocks are struggling to prevent losses after witnessing only one day of gains this month. While oil prices are weak as if there is no demand, bond prices are rising as if preparing for a recession. The potential for continued volatility in gold prices remains strong. US mortgage demand has fallen to a 30-year low.
Meanwhile, the US is witnessing the second-largest wave of bankruptcies in the last 14 years. 452 large companies declared bankruptcy (until August 2024). These figures are just below the 466 major bankruptcies recorded during the 2020 quarantine. In August, 63 firms went bankrupt, making August 2024 the fourth worst month in the last four years.
Which sectors are experiencing more bankruptcies? The highest number of bankruptcies occurred in the consumer sector with 69, followed by the industrial sector with 53, and the healthcare sector with 45. These data indicate that the economic slowdown and impending recession fears may not be unfounded.
Current Status of Cryptocurrencies
The situation here is very different. First, the recession we talk about negatively impacts stock markets, and naturally, if we see such a thing, cryptocurrencies will also be negatively affected. The economy stagnates, people lack money to throw at meme coins on the Solana 
$217 network, and prices in crypto fall further.
The long-standing decrease in risk appetite and the sales that BTC encountered at each new peak indicate that concerns about the global economy are also hitting this area. Moreover, in light of all these data, most economists say the Fed will go for a 75bp (total) rate cut this year and that sharp cuts of 50bp or more should not be expected.
The total volume on cryptocurrency exchanges is $63 billion, despite the BTC price climbing to $57,000, which is unusual for bull markets. Crypto perhaps needs to take the recession more seriously.
