While the US labor market may appear reasonably solid on the surface, underlying indicators are showing a deterioration that is making the Federal Reserve anxious. The latest JOLTS data revealed 7.67 million job openings, but at the same time, the number of hired employees and the quits rate—the number of employees voluntarily leaving their jobs—are both declining.
That last point is crucial: people don’t take risks when the labor market becomes more uncertain, and companies are less inclined to hire new staff. This points to an economy that is quieting down and becoming more fragile at the edges.
FED MAY CUT RATES AND BOOST BILL PURCHASES
The Fed is expected to cut rates to 3.50%-3.75% Wednesday. Bank of America predicts an extra move: ~$45B in monthly short-term Treasury bill purchases to maintain bank reserves and prevent liquidity issues. Combined with MBS…
— Walter Bloomberg (@DeItaone) December 9, 2025
Financial System Increasingly Sensitive to Interest Rates #
The US central bank is looking beyond just inflation. In the current system, a growing portion of debt is regularly rolled over. These are typically short-term debts, which are sensitive to interest rate hikes and vulnerable when rates remain high for an extended period. A high policy rate impacts not only mortgages but also:
- Government interest expenses
- Refinancing in commercial real estate
- Weak corporate balance sheets
- Banks’ willingness to provide credit
In this context, a rate cut is not just a signal that inflation is under control, but also an attempt to prevent the so-called ‘wall of refinancing’ from turning into a credit shock.
Why the Fed is Buying T-Bills (Without Calling It QE) #
Now that Quantitative Tightening (QT), the reduction of the balance sheet, is over, the Federal Reserve is shifting to reinvestment in Treasuries, particularly short-term Treasury bills. This does not constitute a new round of economic stimulus, but rather an attempt to keep bank reserves high enough to prevent money markets from coming under pressure due to the massive bond issuance by the Treasury Department.
The central bank calls this “plumbing”: keeping the financial pipes stable, not stimulating the economy.
What This Means for Markets #
According to analysts, all of this points to a rate-cutting path intended to buy time, not to start a new growth phase. In principle, this is not a development that should propel the Bitcoin price to new heights, but it will certainly provide a positive contribution.
With this new policy, the Federal Reserve is indeed creating stability. At least, that is the intention. And stability is ultimately necessary for Bitcoin and other financial assets to start performing. In that respect, this is at least a step in the right direction, but on its own, this development is not enough to start a new bull market.