When rate cuts trigger an asset price revolution: why do markets rebel differently?

Following the Federal Reserve’s announcement of a new 25 basis point rate cut to the 3.5%-3.75% range, an unforeseen drama unfolded in global markets. The indication of labor market weakness as the main reason for this move would traditionally support risk assets, but instead it triggered a price revolution where each asset class began dancing to its own music.

The Collapse of Consensus: When Monetary Policy Loses Its Power

This is already the sixth rate cut since September 2024, but the December Fed decision proved pivotal: three dissenting votes marked a record since September 2019. One FOMC member advocated for a more aggressive 50-point cut, two others preferred a pause. This split among Fed leadership signals deep disagreements over the future course, further increasing market uncertainty.

What is most characteristic in this situation is that the asset price revolution began not despite, but precisely because of this rate cut. Instead of the expected synchronized rise in risk assets, each market segment launched its own pricing mechanism.

US Treasury Bonds: An Anomaly Changing the Game

The first anomaly in nearly thirty years was initiated by the most conservative segment of the market. The yield on 10-year Treasury notes rose by nearly half a percentage point simultaneously with the Fed rate cuts — a phenomenon contradicting the classic logic of easing cycles.

As of December 9, this yield reached 4.17%, the highest since September, while 30-year bonds hovered around 4.82%. This market anomaly is interpreted in three ways:

Optimistic scenario: the market signals confidence in economic resilience and no recession. Neutral stance: only normalization of yields to pre-2008 levels. Pessimistic view: a punishment for the fiscal irresponsibility of the US.

JPMorgan’s chief global rate strategist, Barry, points to the core issue: the market had already priced in this policy, and the actual rate cut occurred amid high inflation, with the Fed effectively trying to support economic growth instead of cooling it.

Silver Soars: An Industrial Price Revolution

Contrasting the cautious bond market, silver is experiencing a historic price revolution. On December 12, spot prices exceeded $64 per ounce, setting a new all-time high. Over twelve months, the metal has surged by an impressive 112% — nearly double the growth of gold.

Several reasons underlie this, but the most fundamental is a five-year supply deficit. The Silver Institute forecasts that in 2025, the global shortage will amount to 100–118 million ounces. Expectations of rate cuts have reduced opportunity costs for holding zero-yield assets, and the inclusion of silver in the US critical minerals list has raised concerns over trade restrictions.

However, the biggest growth driver is rooted in industry. 55% of global silver demand comes from solar energy, and according to IEA forecasts, by 2030, solar alone will increase demand by nearly 150 million ounces annually. This long-term trend transforms the silver price revolution from a speculative object into a structural trend.

Gold: The Peacemaker Amid Chaos

Against the backdrop of dramatic changes, gold remains the calm sage. After the rate cut announcement, COMEX gold futures rose just 0.52%, reaching $4,258.30 per ounce — a modest figure compared to the neighboring market price revolutions.

The SPDR Gold Shares ETF, the largest gold fund in the world, holds about 1,049.11 tons of gold (as of December 12) — slightly below October’s peak but 20.5% more than the same period last year.

Long-term support comes from central banks: in Q3 2025, global purchases totaled 220 tons, up 28% from the previous quarter. The People’s Bank of China has been increasing reserves for 13 consecutive months, demonstrating consistent demand independent of short-term rate fluctuations.

Short-term price swings are controlled by two opposing forces: rate cuts support gold, but easing geopolitical tensions and declining investment demand exert downward pressure.

Bitcoin: Cold Reaction in a Risk Environment

The cryptocurrency market responded to rate cuts with a move that disappointed most speculators. Bitcoin rose to $94.5K but quickly fell back to around $92K (current price according to latest data — $90.80K). Within 24 hours of the Fed decision, futures liquidation amounts exceeded $300 million, and the number of liquidated traders reached 114,600.

This reaction starkly contrasts with the traditional view of bitcoin as a risk asset that should rise on easing. Analysts note a clear decoupling of cryptocurrencies from traditional markets. Despite companies like MicroStrategy continuing accumulation, structural selling pressure remains strong.

Recently, Standard Chartered drastically revised its outlook: the target price for end-2025 was lowered from $200K to around $100K. The bank states that large institutional buyers have “reached their capacity limits”.

Price Revolution as a Symptom of Systemic Consensus Crisis

When a single monetary impulse triggers such divergent reactions across assets, it reflects a fundamental transformation in markets. Uncertainty about the future Fed policy has become critical.

Recent Fed economic forecasts have raised expectations for US growth in 2025–2028, with the 2026 forecast revised upward from 1.8% to 2.3%. However, the “dot plot” for 2026 rates shows an extreme divergence: the median forecast of 3.375% is unstable and far from consensus.

Adding to internal Fed divisions, its independence is increasingly questioned. US President has repeatedly expressed dissatisfaction with the rate cut pace, calling this one “too small” and insisting it should be “doubled.” The criteria for the new Fed chair include “willingness to cut rates immediately” — signaling the possibility of appointing a more “dovish” leader, which could further undermine confidence in monetary independence.

Conclusion: When Price Revolution Replaces Monetary Rules

Within 24 hours of the Fed decision, COMEX silver futures surged 109% year-to-date, while US 10-year bond yields hit a three-month high of 4.17%. This divergent price revolution sends a clear market signal: traditional monetary policy has lost its monopoly on governing price formation logic.

With a new Fed chief on the horizon and economic data fluctuating, 2026 may hide even more “atypical” surprises. Investors who learn to recognize the main drivers of each market segment separately could find a new balance amid this price revolution and asset differentiation.