Federal Reserve cuts interest rates combined with $40 billion repurchase operations: capital outflows accelerate, and global market segmentation becomes evident

After the Federal Reserve’s expected 25 basis point rate cut, there has been a noticeable shift in global capital flows. In addition to the rate cut, the Fed also announced it will repurchase approximately $40 billion worth of short-term government bonds (T-bills) each month, further lowering real interest rates and injecting liquidity into the market. From a policy perspective, this combination should be favorable for risk assets, but the market’s actual response has shown clear divergence.

The rate decision was largely in line with expectations, with 3 out of 10 members voting against. Fed Chair Powell explicitly stated that there is still room for further rate cuts in 2026, after which the policy may enter a period of observation, with a renewed focus on inflation control. Against this backdrop, the market has begun to reassess the future monetary policy path, especially with caution toward the policy stance of the new dovish-leaning Fed Chair Kevin Hasset. Hasset has previously hinted that the number of future rate cuts could exceed three, which in the short term has increased market uncertainty.

It is worth noting that the relative attractiveness of dollar assets is declining. Major currencies like the euro and yen are performing relatively well, driven by interest rate differentials and yield changes, with Germany’s 30-year government bond yield reaching new highs. Meanwhile, US stock indices failed to sustain upward momentum, while precious metals showed strong performance: gold prices broke through $4,300, silver hit a new all-time high, and platinum and palladium reached new phase highs, indicating that safe-haven and inflation-hedging demand are heating up.

The cryptocurrency market has also not fully benefited from the easing signals. Bitcoin fluctuated narrowly between $92,000 and $93,000, ETF fund outflows continued, and some crypto capital flowed back into fiat assets, leading to weak demand recovery. Overall, funds are withdrawing from high-volatility assets and shifting toward regional and structural opportunities.

From a cross-market allocation perspective, the spread between European and American assets has become a key driver. European markets are relatively favored, and China’s market has also attracted significant capital inflows. Bloomberg data shows that hedge funds are actively positioning for a potential rebound.

Specifically, the DAX index is expected to break through the long-term consolidation range since June 2025. Although the EU’s monetary policy is no longer dovish, inflation remains around 2.3%, limiting upside in yields and instead providing conditions for capital to flow back into equities. Against the backdrop of a weakening dollar and high valuations in the US tech sector, European stocks offer relatively balanced allocation value, with a short-term pullback to the 20-day moving average before seeking a breakout.

Regarding the Hang Seng Index, it is currently operating near the 200-day moving average, in a consolidation phase. Declining volatility indicates the market is waiting for new catalysts. Technical structures show that the triangle pattern has not yet completed, and prices may first test key support areas. In the medium term, around 24,500 points remains an important target; if this level is supported, the market could attract buyers again and rebound.

Overall, the Fed’s rate cut has not directly boosted global risk assets. Capital outflows and regional rotation are becoming the main themes, and investors should pay more attention to structural opportunities and rhythm management.