The hawkish forward guidance accompanying the Federal Reserve’s 25bp rate cut last night led to significant market turbulence, reflecting the challenges of balancing monetary policy in a complex economic environment. While the rate cut met expectations, the Fed’s revised dot plot, indicating only two additional cuts next year, diverged sharply from earlier market pricing. Consequently, bond yields moved higher across the curve, with the 10-year Treasury yield trading to levels seen before the rate-cut cycle began, diminishing the intended impact of monetary easing. Equities also corrected sharply, erasing recent gains, while the US dollar strengthened.