Here's why a 25bps cut wont save US economy
The “Bad News Is Good News” trade is a faith-based rally. Here’s what breaks when the market realizes rate cuts are not stimulus, they’re a diagnosis. For professional investors & macro traders. This is research, not investment advice. Input Variables (Data / Events) 1) Policy is already in “easing mode,” but conditions are not behaving like a normal easing cycle. The Fed’s target range is 3.50%–3.75% after the Dec 10, 2025 cut. The upper limit of the target range is 3.75% as of Dec 21, 2025. 2) Markets keep treating “cut” as “rocket fuel.” Traders were pricing ~87% odds of a 25bp cut into the Dec meeting (pre-decision). Post-cut, equities still rallied on hopes of more easing even as the Fed signaled caution. The “bad news is good news” framing has been explicitly called out in market commentary this year. 3) The inflation data is “cooling,” but the reliability is questionable (and that matters). November CPI printed 2.7% YoY (and core 2.6%) but multiple analysts flagged distortions tied to the shutdown and data collection timing. Cleveland Fed’s Beth Hammack has openly questioned whether the November CPI understates inflation, preferr
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