The market has been waiting for a long time, but the Fed's shift away from rate cuts hasn't arrived—on the contrary, there's even more sobering news.

This week, several Federal Reserve regional presidents took turns speaking, and their core message was very clear: under the current economic conditions, there is no need to rush into rate cuts. This shift instantly overturned market expectations. The dollar immediately rebounded, gold prices fell accordingly, and the entire trading sentiment shifted from anticipation to caution overnight.

**What do the data say?**

Fresh December US inflation data: CPI rose 2.7% year-over-year, core CPI increased 2.6%. Although it didn't continue to rise and appears somewhat restrained, it hasn't shaken the hawkish stance of Fed officials. The market is now pricing in that the Fed may not start cutting rates until June, with an expected total easing of about 50 basis points for the year.

This change in expectations directly reflected in the stock market: the Dow fell 0.80%, the S&P 500 declined 0.19%, and the Nasdaq dropped 0.10%. When the inflation data was released in the morning, there was some excitement, but it was quickly hit by officials' comments, leading to a gap-up that ultimately closed lower.

**Financial sector fares worse**

JPMorgan Chase's Q4 earnings exceeded expectations in revenue and profit, but investment banking revenue unexpectedly softened. Coupled with rumors that the White House plans to set a cap on credit card interest rates (possibly at 10%), which poses a potential threat to financial institutions' profit margins. As a result, the stock price dropped 4.19%, dragging down the entire financial sector.

**Europe and commodities each go their own way**

European markets showed divergence: energy stocks rose due to escalating Middle East tensions, but overall sentiment was still weighed down by geopolitical risks, with UK and French indices slightly down, and Germany's DAX barely up 0.06%.

Commodities experienced a rollercoaster. The US urgently called for citizens to evacuate Iran, raising fears of supply chain disruptions, causing US crude oil to surge 2.77%. Meanwhile, gold and other commodities were under pressure due to expectations of liquidity tightening.

**Implications for the crypto market**

The delay in rate cut expectations suggests the dollar may remain strong longer, which puts pressure on liquidity-sensitive assets—including cryptocurrencies. Until macro policy shifts become clearer, market risk appetite may continue to be suppressed.