Fed Signals Slower Rate Cuts
Bukele Scales Back Bitcoin Initiative and Barclays Plans 20% Bonus Increase
FINANCE
Fed Signals Slower Rate Cuts
The stock market tumbled sharply after the Federal Reserve signaled fewer rate cuts in 2025, unsettling investors. The Dow Jones dropped 2.6%, the Nasdaq fell over 3.5%, and the S&P 500 slid 2.9%. These declines followed projections indicating just two rate cuts next year, down from four previously expected, along with an increased terminal interest rate of 3% and a 2.5% inflation forecast.
Brian Albrecht, chief economist at the International Center for Law and Economics, attributed the market reaction to concerns over persistent inflation. BlackRock’s Rick Rieder described the Fed’s moves as marking a new phase of the rate-cutting cycle, where policy adjustments will be more measured.
The Fed's latest "dot plot," showing reduced rate cuts and higher interest rate projections, reflects cautious policymaking amid economic uncertainty. Rieder noted that the incoming administration of President-elect Donald Trump could introduce unpredictable policy changes, particularly around tariffs, trade, and immigration, potentially impacting inflation and growth.
With the Fed signaling slower rate cuts and external factors adding complexity, investors brace for a period of heightened economic and market uncertainty. As Rieder quipped, the dot plot's significance may fade, signaling the need to adapt to a "very different period of policy influence."
CRYPTO
Bukele Scales Back Bitcoin Initiative
El Salvador’s President Nayib Bukele has agreed to scale down his bitcoin initiative to secure a $1.4 billion loan from the International Monetary Fund (IMF). While bitcoin will remain legal tender, the government will limit its participation in bitcoin-related activities and relax requirements for businesses to accept the cryptocurrency.
The IMF stated the agreement includes measures to mitigate risks tied to bitcoin, reflecting a shift toward accommodating crypto policies in anticipation of a more crypto-friendly global environment under President-elect Donald Trump. Despite initial enthusiasm, surveys indicate bitcoin adoption in El Salvador stalled after most users exchanged their free $30 sign-up bonus for dollars or goods.
Under the deal, the government will reduce bitcoin purchases, unwind involvement in the Chivo wallet, and restrict tax payments in bitcoin. The IMF highlighted El Salvador’s economic recovery, driven by robust remittances and tourism, while emphasizing the importance of transparency and financial stability in managing digital assets.
FINANCE
Barclays Plans 20% Bonus Increase
Barclays Plc is preparing to increase annual bonuses by as much as 20% following a strong year for traders and investment bankers. Staff in the trading unit may see a 5%-10% increase, while those in debt and equity capital markets could receive 10%-20% more, according to sources familiar with the matter.
The London-based bank’s improved performance follows a challenging year when bonuses fell 43% due to weak dealmaking. In 2024, Barclays reported a significant boost in activity, with advisory revenue more than doubling in Q3 and trading income exceeding expectations. CEO C.S. Venkatakrishnan’s strategy to enhance returns amid stubbornly high interest rates has further solidified Barclays’ financial standing.
Wall Street is also anticipating higher bonuses, with debt capital markets bankers expected to see pay increases of 25%-35%, according to Johnson Associates Inc. Barclays’ planned payouts reflect the broader rebound in capital markets activity.
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