Before the Fed's decision, global markets fluctuated.

Fluctuations before the turning point

Global financial markets fluctuated strongly as investors anxiously awaited the interest rate decision from the US Federal Reserve (Fed) in its meeting from September 16-17, scheduled to be announced in the early morning of September 18 (Vietnam time).

With US economic data showing clear signs of weakness, investors are betting heavily that the Fed will cut interest rates by at least 0.25 percentage points at the meeting and possibly two more cuts in the rest of 2025. This reflects the US economy facing a slowing labor market, even as inflation remains high, putting the Fed in a dilemma.

The recent jobs report from the US Department of Labor was revised down by nearly 1 million jobs from April 2024 to March 2025 compared to the initial estimate, reinforcing concerns about an economic slowdown.

Weekly jobless claims rose to 263,000, the highest level in nearly four years, while the consumer price index (CPI) in August 2025 increased 0.4% compared to the previous month, higher than the 0.2% in July.

These numbers have Wall Street strategists saying the Fed is facing a "worst case scenario," as Chief Economist Claudia Sahm at New Century Advisors said: "They won't cut rates because of good news on inflation, but because of bad news on jobs."

The CME FedWatch tool shows the probability of the Fed cutting interest rates three times this year is up to 76%, reflecting expectations of continued weakness in the labor market.

Gold prices rise on expectations of Fed rate cut. Photo: HH

Fed Chairman Jerome Powell is under intense pressure from US President Donald Trump, who has repeatedly criticized Powell for being slow to cut interest rates. Trump has called Powell a “late man.” He has even threatened to launch a major lawsuit against the Fed Chairman and criticized the $2.5 billion cost of renovating the Fed headquarters.

At the end of the trading session on September 15 on the New York market (early morning of September 16, Vietnam time), the spot gold price jumped by about 1%, reaching a new historical peak of over 3,680 USD/ounce (equivalent to about 118 million VND/tael). The increase in gold price was supported by falling US bond yields, a weakening USD and increased demand for safe havens. The USD continued to fall, with the DXY index falling another 0.25% to 97.3 points, reflecting expectations of the Fed easing policy.

US stocks also maintained a strong rally, with the S&P 500 index surpassing 6,600 points for the first time on September 15, closing at a record high thanks to optimism from positive reports on artificial intelligence (AI) and expectations of lower interest rates. Big tech stocks such as Alphabet and Tesla led the rally, helping the S&P 500 and Nasdaq Composite reach new highs.

These fluctuations are not limited to the US but are spreading globally, with commodity prices such as oil and base metals also rising due to fears of inflation and economic recession.

This pressure is not only from politics but also from within the Fed.

Fed Chairman Jerome Powell is under pressure from President Trump, who has repeatedly criticized him for not cutting interest rates quickly enough to support the US economy. The pressure has increased when Mr. Trump said that the Fed should cut interest rates immediately, even by 0.5 percentage points.

Trump's allies in the White House have used the revised jobs data to criticize Powell, even threatening to replace him with someone closer to him.

The pressure is not just political, but also internal to the Fed, where there is a split over the timing of a rate cut. Some Fed governors appointed by Mr. Trump have advocated cutting sooner, while Mr. Powell has maintained a “data-dependent” stance, emphasizing the need for more evidence of falling inflation before acting.

That risks eroding confidence in the Fed, which is seen as a symbol of independence. If confidence is lost, the dollar could weaken over the long term, as seen with DXY falling below 98, prompting countries to push for de-dollarization.

Many countries such as China, Russia and the BRICS countries are increasing their gold reserves and diversifying their assets, looking to gold, euros... to reduce their dependence on the USD. The recent surge in gold prices is proof of this trend, as gold has become a safe haven asset against geopolitical and economic instability.

Analysis shows that if the Fed cuts by 0.25 percentage points as expected (probability over 90% according to CME FedWatch), the US stock market may continue to increase, and assets calculated in USD such as gold, silver... may increase accordingly.

If the jobs data continues to be weak, the Fed could cut more aggressively. However, if inflation rises sharply due to Mr. Trump’s tariff policies, the Fed may have to stop cutting, shocking the market and leading to sharp volatility in global stocks and commodities.

The impact on the world economy is large: Emerging countries may benefit from a weaker dollar, lower exchange rate pressures, and less pressure on capital outflows. But Europe and Asia may suffer from imported inflationary pressures, slowing global growth.

For Vietnam, if the Fed cuts interest rates, this is a rare opportunity to stabilize the exchange rate - which has recently increased sharply, at times reaching above 27,000 VND/USD and boost growth. The pressure on the VND to depreciate will decrease as the USD weakens, helping the State Bank consolidate foreign exchange reserves from FDI and remittances.

Domestic monetary policy will be more flexible, with inflation controlled below 4.5%, allowing the State Bank to lower lending rates and stimulate credit for businesses and consumers.

Vietnam’s stock market could attract foreign capital back, especially in the real estate, banking and retail sectors. The bond and real estate markets will also recover thanks to lower capital costs. However, some reports also warn of the risk of inflation returning if there is too much easing and global geopolitical factors.

Vietnamnet.vn

Source: https://nhandan.vn/un-tourism-du-lich-viet-nam-tang-truong-an-tuong-nhat-the-gioi-post908197.html