End of 2025: 3 Fed scenarios and their impact on the marketS&P 500SP:SPXSwissquoteThe FED has not cut the federal funds rate since the end of 2024. Let's take a look at the 3 possible scenarios for the Fed funds rate between now and the end of the year, and the impact on the stock market for equities, bonds, the US dollar and Bitcoin. The table below summarizes the 3 possible scenarios and their possible impact on the stock market. 1) No FED pivot for the whole of 2025 (the most bearish case for risky assets on the stock market) In this case, the FED would keep rates unchanged for the whole of 2025 in order to continue the fight against inflation. The market would find itself trapped by its expectations, as it anticipates an easing by the end of the year. On the stock market, this would trigger a major correction in the S&P 500, currently valued at levels close to its 2021 highs. Two-year interest rates would rebound, as would long-term bond yields, leading to increased pressure on US government debt and lower bond prices. The US dollar is expected to rebound strongly, driven by a technical bullish pattern, reinforcing its attractiveness on the foreign exchange market. Finally, in the crypto-currencies, a sustained bear market would set in, with an estimated average duration of thirteen months (the famous bear market of BTC's 4-year cycle), marking a major reversal for Bitcoin and altcoins. 2) A “technical” pivot by the FED (1 isolated rate cut) This intermediate scenario would correspond to a cut in key rates as early as September or October 2025, following the arrival of Stephen Miran on the FOMC. However, this cut would remain isolated and would not mark the start of a prolonged rate-cutting cycle, as inflation would still be too high. On the equity markets, this would translate into a consolidation phase: the S&P 500 would move in a corridor between 5800 points and its recent record highs. Two-year yields would stabilize at around 4%, hovering around their 200-day moving average, with a slight rise in bond prices, especially in the event of a weak job market. The US dollar would also stabilize, with a moderate appreciation on the foreign exchange market. As for crypto-currencies, the impact would be neutral to slightly bullish, with the possibility of a final peak before the next bear market settles in, linked to the four-year cycle seen on Bitcoin. 3) A “real” FED pivot (several rate cuts between now and the end of December 2025) In the case of a real monetary pivot, the FED would cut its key rate in September, followed by two further cuts before the end of the year. This scenario would have a markedly positive impact on equity markets, with the S&P 500 possibly reaching the 6700-point target. On the rates side, this would lead to a marked downtrend, with new lows for short- and long-term yields, while bond prices would start to rise sharply again. The US dollar would enter a prolonged downtrend, with a target of 95 points for the DXY index. Last but not least, crypto-currencies are set to benefit from this accommodating climate: Bitcoin and altcoins are likely to see their prices rise, marking the end of a bullish cycle at the end of the year. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. 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