Global markets are in turmoil and investors are betting that the Federal Reserve will be forced to step in with aggressive rate cuts as financial stress intensifies across asset classes. Markets Fall as Investors Believe Fed Will Have to Cut Rates in 2025 Bitcoin (BTC) fell 10% on Monday to around $74,500, while U.S. stock markets are on track for their worst three-day decline in years. S&P 500 futures are down nearly 5% in a single session, bringing the total loss since last week to close to 15%. As riskier assets come under pressure, investors are increasingly pricing in a dramatic reversal by the Federal Reserve that could lead to as many as five rate cuts in 2025, futures markets show. Credit Markets Signal Fed Has No Other Choice The CME FedWatch Tool shows investors see a 61% chance of a 25 basis point rate cut at the Fed’s next meeting on May 7, which would lower the target federal funds rate to 4.25%-4.50%. Markets expect rates to fall to 3.00%-3.25% by year-end. Historically, the Fed has responded to market downturns with aggressive policy easing, including rate cuts, bond purchases and liquidity injections. Investors appear to be positioning for a similar playbook this time around as financial conditions tighten rapidly. The market's growing belief is that the Federal Reserve cannot withstand the pressure for long. Falling asset prices, rising credit stress and the need for the U.S. government to refinance suggest that policy will need to be changed sooner rather than later. We'll see if the Fed will meet these expectations at its May meeting or if markets will have to wait for further deterioration. But one thing is clear: financial markets are signaling loud and clear that the Fed's tightening cycle may already be over and the next move could be a rapid race to lower rates. *This is not investment advice. Continue Reading: As Markets Wake Up to Black Monday, Investors Believe Fed Will Step In! Will There Be a Rate Cut in May? Here Are the Details