The Federal Reserve has just sent a seemingly contradictory signal—interest rate cuts are continuing, but their tone is becoming more hawkish. On December 10th, they cut by another 25 basis points, bringing the rate to 3.50%-3.75%, marking the third cut this year with a total reduction of 75 basis points.

But there's a detail worth noting: the dot plot indicates that there might be only one more cut in 2026, and Powell's statements have also become more cautious, emphasizing "decisions at each meeting." In other words, the rate-cut cycle is nearing its end.

Interestingly, the market has completely ignored these hawkish signals. Instead, it is overwhelmingly optimistic—U.S. stocks rose sharply, the Dow even surged nearly 500 points, and the S&P 500 index is already near its all-time high. Precious metals performed even better, with silver hitting a new historic high. U.S. Treasury yields continue to decline, and the dollar is also depreciating.

The key point is that in such a low-interest-rate environment, risk assets are fully embracing these conditions. Coupled with recent signs of a somewhat weakening job market, the market interprets the easing policy as a positive signal to support economic growth, and everyone is betting on this trend continuing.

In simple terms: the expectation of rate cuts has been realized, hawkish signals exist but are being ignored by the market. Risk assets continue to celebrate, and the Christmas rally's warmth is also rising.