The market is undergoing a dramatic adjustment as expected. The probability of the Fed cutting interest rates in January has plummeted from previous highs to 22%. What does this number reflect? In simple terms, the anticipated easing trend at the beginning of the year is basically out of the question.

Where does the problem lie? Fed Vice Chairman Williams recently sent a signal: the latest CPI data may be underestimated, and the actual inflation pressure is more severe than it appears. In other words, the Fed may need to proceed more slowly and cautiously on the path of interest rate cuts, or even maintain high rates for a longer time. This is a real blow to market sentiment.

But that's not all. The White House has been applying pressure, with the Trump administration pushing for a looser monetary policy and rapid interest rate cuts. You can imagine—on one side is the Fed's data-driven cautious attitude, and on the other side are political calls for interest rate cuts. This confrontation is taking place in the shadows, and the market is becoming increasingly tense amid this uncertainty.

What happens in this state? It's simple. Any unexpected employment data, inflation announcement, or a statement from Powell can reverse the entire market expectation in a matter of minutes. The 22% probability of a rate cut could suddenly soar, leading to a rapid rebound in asset prices – we usually call this type of rebound "revenge".

The current operational logic is actually quite clear: closely monitor macro data and policy statements, but there is no need to stake everything on one direction. The key is to maintain sufficient liquidity and sensitivity. When the actual reversal signal appears, you need to be able to react quickly—whether it's bottom fishing or riding the wave of an uptrend.

The market has already pushed expectations down to a low level, which is often the most resilient moment. The next wave of volatility may be just around the corner, are you ready?