QCP: FOMC Meeting Brings Rising Catalyst for Markets as Options Market Shifts Back to Calls

Odaily Planet reports that last night's FOMC meeting provided a long-awaited catalyst for the market to move higher, pushing the price of Bitcoin past $85,000, QCP said in a post on its official channel. The Federal Reserve decided to scale back its ‘quantitative tightening’ programme from April. The market interpreted this as an indirect rate cut, reinforcing expectations that the Fed will begin easing as early as June.

At the time of writing, the market expects three rate cuts in 2025, in June, September and December. Beyond the immediate euphoria, the Fed's tone is decidedly cautious. Policymakers have lowered their growth forecast to 1.7 per cent (a 0.4 percentage point reduction) while raising their inflation forecast to 2.8 per cent, suggesting that the risk of stagflation is rising. In addition, the Fed's dot plot showed a more hawkish shift from last December, with the number of officials not expecting a rate cut in 2025 increasing to four.

In terms of the options market, market positioning has returned to normal with a shift in bias back towards call options. This is in stark contrast to earlier in the week when the bias favoured puts. The key test will now come tonight when the US markets open.