Morgan Stanley’s reversal this time came a bit fast.

Remember after the release of the September non-farm payroll data, they pushed their rate cut expectations all the way to 2026? Yet just two months later, their stance has done a 180-degree turn—they’re now betting on a rate cut in December. What happened behind the scenes?

There are three signals that cannot be ignored. First, there’s been a shift within the Fed itself: core decision makers like Williams, Waller, and Daly have recently made notably dovish statements. Second, the CME interest rate futures market has voted with real money: the probability of a December rate cut is now priced in at 87%. Most importantly, Morgan Stanley themselves admitted they “withdrew too early”—such a quick admission of error is rare on Wall Street.

Economic data are also supporting this narrative. Indicators in November have started to soften, the unemployment rate is showing signs of rising, and the resilience of consumer spending is being questioned. According to Morgan Stanley’s latest projections: a 25 basis point rate cut in December to start things off, followed by cuts in January and April next year, eventually stabilizing the federal funds rate in the 3% to 3.25% range.

What does this mean for the markets? Once the liquidity gates loosen, risk assets often react first. However, there’s a variable this time—has inflation really been tamed? If prices rise again, the Fed could face a dilemma.

For the crypto market, any change in macro liquidity is worth watching. Historically, every time monetary policy shifts, capital flows get reshuffled. But exactly how it will play out depends on the Fed’s final move.

(This is for market observation only and does not constitute any investment advice.)