The math for a rate cut

The Liquidity Map · Macro report

The math for a rate cut

Since the December cut, the Fed has already met five times and moved nothing.

On 15-16 September comes the sixth meeting since then.

I'm tracking a simple rule to know whether now is actually the moment for a cut.

Underneath, three different indicators have already bottomed, in the order they should have.

September 6, 2026 · 8 min read

Key takeaways

The Fed rate needs to stay about 25 basis points above US03M. If US03M doesn't drop below 350 basis points, there's no real need for a cut.
Today, US03M sits at 376 basis points, still above the threshold. The Fed rate has stayed unchanged at 3.50-3.75% since 11 December 2025.
The last rate cuts weren't normalization, they were recession cuts. The real panic signal comes when the whole market pumps at once and yields start collapsing, starting with US10Y.
A Fed rate more likely to rise than fall isn't bad news. In the last five rate-hiking cycles, from 1994 through 2023, the S&P 500 never fell hard in any of them.
Three indicators have already bottomed in the last few months, in order: altcoin dominance first, the Copper/Gold ratio on 23 February 2026, then the Fed's balance sheet in December 2025.
The Copper/Gold ratio is up 34.3% since the February low, a sign that fresh capital is entering markets, not just piling into safe havens.
Prices on charts are the last thing to show the shift. Capital moves first into Bitcoin, big-cap stocks, and metals, only later into everything else.

Since the 11 December 2025 cut, the Fed has met five more times.

Every time, it left the rate unchanged.

On 15-16 September comes the sixth meeting, and I'm tracking a simple equation for what should come out of it.

And underneath, three other things had already happened, in the order they should have.

Definition

US03M

The yield on US government bonds maturing in three months. It reacts faster to market expectations around the Fed rate than almost any other instrument, because investors keep repositioning it based on what they think is coming. The gap between it and the actual Fed rate, the delta, shows how close or far the market is from a real cut.

The equation

The Fed rate follows US03M, not the other way around

The Fed rate should stay roughly 25 basis points above US03M.

That's the rule I've tracked for years, not a guess made on the fly.

If US03M doesn't drop below 350 basis points, there's no real need for a cut.

Today, US03M sits at 376 basis points. Above the threshold, not below it.

The Fed rate has held at 3.50-3.75% since 11 December 2025, unchanged across five straight meetings.

And I need to repeat something I always say: you don't want rate cuts right now. The last cuts weren't normalization, they were recession cuts.

The real panic signal comes when the whole market pumps at the same time and yields start collapsing, starting with US10Y. We're not there.

376 bpUS03M today, against the 350 basis point threshold below which a real need for a cut would appear.

US03M versus the Fed rate, last two years. The 350 basis point threshold marked with a dashed line.

Daily distribution of the US03M minus Fed rate delta, last two years. Below -25 basis points, the rarely reached zone.

But a positive delta isn't bad news. It's the opposite.

The direction

Rates are more likely to rise than fall, and that's a good thing

US03M above the Fed rate means the market doesn't see real pressure toward a cut.

In practice, rates stay roughly where they are, or lean slightly toward rising, rather than dropping anytime soon.

A Fed rate that doesn't need to fall is a sign of an economy holding up, not one breaking down.

I've seen this before. In the last five hiking cycles, from 1994 through 2023, the S&P 500 never fell hard in any of them.

1994-95, the mildest, +0.1%. 1999-2000, +6.8%. 2004-2006, +11.6%. 2015-2018, +20.9%. 2022-2023, the most aggressive, +4.8%, after a rough 2022 before the recovery.

The simple story, higher rates equal falling stocks, doesn't hold up over a full cycle. Higher rates, when they come from a solid economy, can coexist with growth.

5 of 5How many of the last five Fed rate-hiking cycles ended without a hard drop in the S&P 500.

The S&P 500 over 33 years, log scale, with the five Fed hiking cycles marked directly on the chart and the price return in each window.

Underneath this direction, three other things have already moved, each on its own time.

The order

Three indicators bottomed, in the right order

Altcoin dominance bottomed first of all, after the longest downtrend I've seen there, over three years instead of the natural year and a half to two.

The Copper/Gold ratio followed, with the low confirmed on 23 February 2026.

Since the February low, copper is up 34.3% against gold. Fresh capital is entering markets, not just piling into safe havens.

The Fed's balance sheet turned in December 2025, two months after altcoin dominance, but earlier than Copper/Gold. I've already written about that in detail, I won't repeat the numbers here.

It's the natural order: altcoin dominance shows the first sign, Copper/Gold confirms the environment is loosening, the Fed's balance sheet confirms it structurally.

I covered the halfcoin season and retracement on major altcoins separately.

+34.3%How much the Copper/Gold ratio has risen since the 23 February 2026 low.

The Copper/Gold ratio, last two years. The low on 23 February 2026, then steady outperformance.

The Fed's balance sheet, last two years. The low in December 2025, then steady expansion.

But if everything already moved, why doesn't it show up on prices yet?

The lag

Prices are the last thing to show the shift

Capital moved first into safe havens: Bitcoin, big US stocks, gold, silver, oil.

That's why the market is still ranging at lows across a lot of zones. It's natural, not a bad sign.

Metals ran up parabolic, and now they're in chop. It isn't the end of the move, it's the rotation to the next market.

This is my read, not a separately verified fact: the liquidity excess coming benefits the crypto space most aggressively.

Not because crypto is special, but because it's the last place fresh money reaches, after everything else has filled up.

3How many different indicators have already bottomed, in the order I've tracked for years.

And if the pattern repeats like before, there's a window worth tracking from here.

The target

2027-2028, the case for reconnection

I believe 2027 is the year all capital markets reconnect, with aggressive upside, almost at the same time.

Even with a stretch of chop still ahead through the end of 2026.

I've seen this pattern before: the Fed balance sheet expansion from 2012-2014, then from September 2019 through 2022, both preceded expansions in crypto.

These aren't independently verified figures, they're my own analogies, from what I've tracked across cycles.

But it ties together with everything above: altcoin dominance, Copper/Gold, the Fed's balance sheet, all pointing the same direction.

2027-2028The window where I see an aggressive reconnection across capital markets.

The Fed's balance sheet from 2008 to today. The two prior expansion cycles, 2012-2014 and 2019-2022, marked.

What's left is the part that matters concretely, how we're positioned now.

How we're positioned

Nothing changed on this alone.

The allocation stays the one already described in previous reports, mostly Bitcoin and Ethereum.

We're watching the US03M-Fed rate delta like a clock, not as a signal for immediate action.

The 2027-2028 window stays a long-term thesis, not a reason to change anything now.

Conclusions

The Fed rate held steady because US03M, at 376 basis points, is still above the 350 threshold where a real need for a cut would appear.

Three different indicators have already bottomed, in the right order: altcoin dominance, the Copper/Gold ratio on 23 February, the Fed's balance sheet in December.

Prices on charts are the last thing to show the shift, not the first. That's why the market still feels stuck.

The case for 2027-2028 stays a read, not a certainty, but every piece I'm tracking points the same direction.

What to watch this week

Does US03M drop below 350 basis points in the coming months, or does it stay above the threshold?
Does the Copper/Gold ratio keep rising, confirming fresh capital is entering markets, not just piling into safe havens?
Do yields, especially US10Y, start collapsing sharply? That would be the real panic signal, not what we see now.

The math for a rate cut

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