Policy Game and Market Reconstruction: The Triple Transformation of the US Financial Market in 2025

In 2025, the global financial landscape will enter a period of deep adjustment. As the core engine of the global economy, the triple game formed by the shift in monetary policy, the alternation of political cycles and the accumulation of debt risks in the United States is profoundly influencing the logic of global capital flows and asset pricing. From the continuous interest rate cuts by the Federal Reserve to the policy shift after the election, from the national debt scale exceeding 38 trillion US dollars to the structural differentiation of the capital market, every adjustment in the US financial market has triggered a global chain reaction, and the logic and impact behind it are worth in-depth analysis.

The "loose balance art" of monetary policy has become the core highlight of the year. In September 2025, the Federal Reserve completed the fourth operation of this round of interest rate cuts, reducing the federal funds rate to 4.00%-4.25%, with a cumulative cut of 125 basis points. This decision is based on a dual consideration of easing inflation and slowing growth: although the core PCE inflation rate remains at a high level of 3.1%, it has shown a definite downward trend, while the unemployment rate has remained stable at 4.5%, indicating a weakening of economic momentum. It is worth noting that expectations for the interest rate path show significant divergence. Nine officials support another 50 basis point rate cut within the year, six advocate maintaining the status quo, and one calls for an interest rate hike, reflecting the diverse judgments of policymakers on the economic outlook. This kind of "preventive interest rate cut" may improve market liquidity in the short term, but it faces a dilemma in the long run - it is necessary to hedge against economic downturn risks through easing, and at the same time, it needs to deal with the debt repayment pressure brought by 38 trillion US dollars of Treasury bonds. The 1.5 trillion US dollars of quantitative easing operation is essentially using excessive money supply to alleviate the debt crisis, further intensifying the risk of inflation rebound.

The policy shift after the general election reshaped the framework of market expectations. The Trump administration's policy propositions feature a dual characteristic of "fiscal expansion + trade protection" : it plans to reduce the corporate tax rate from 21% to 15%, expand tax incentives for domestic manufacturing, and intends to impose tariffs of over 60% on Chinese goods. This portfolio has driven up financial and energy stocks in the short term, but it poses significant risks in the medium and long term: the fiscal deficit is expected to increase by 3 trillion US dollars within a decade, pushing up the upward pressure on US Treasury yields, while trade protectionism has exacerbated the fragmentation of global supply chains, leading to higher export costs for US companies. The market has shown a clear reaction. The US dollar index has dropped by 4% from its post-election peak, and the S&P 500 index has risen by only 1% this year, significantly lagging behind the 5% increase of the MSCI World Index. International capital has begun to withdraw from the US market and turn to regions with more valuation advantages such as the Hong Kong stock market. This pattern of "short-term release of policy dividends and long-term accumulation of risks" has led to a shift in the logic of asset pricing from "liquidity-driven" to "policy uncertainty premium".

The dual constraints of debt and inflation pose a long-term hidden concern. After the scale of US Treasury bonds exceeded 38 trillion US dollars, interest expenses have become a heavy fiscal burden. Although the Federal Reserve's operation of "printing money to buy bonds" has temporarily stabilized the market, it is essentially a dangerous attempt to monetize debt and may weaken the credit foundation of the US dollar. The American Bankers Association predicts that the federal budget deficit will reach 1.9 trillion US dollars in 2025 and exceed 2 trillion US dollars in 2026. The continuously expanding deficit scale may lead to an increase in inflationary stickiness - the core PCE inflation rate is still expected to remain at 2.6% in 2026, still falling short of the Federal Reserve's 2% target. What is more alarming is that the high leverage of the corporate sector resonates with the deterioration of consumer credit quality, and the rising pressure of household debt leads to insufficient consumption momentum. Meanwhile, the delinquency ratio of the banking sector is expected to rise to 3%, which may trigger the exposure of local financial risks.

Looking ahead, the US financial market will be in a balanced period of "policy easing as a safety net and cumulative risk suppression". The Federal Reserve is highly likely to complete two interest rate cuts this year as planned. However, if inflation rebounds beyond expectations, the policy shift may trigger sharp market fluctuations. For global investors, asset allocation needs to take into account both short-term liquidity dividends and long-term risk hedging: The value of gold as an anti-inflation and safe-haven tool continues to stand out. Emerging market assets are expected to obtain more allocation funds during the process of capital rebalancing, and the technology sector with independent and controllable logic will become the core focus in the geopolitical game.

The US financial market in 2025 will be both a testing ground for policy regulation and a microcosm of the global financial order's reconstruction. Its policy choices will not only determine whether its own "soft landing" can be achieved, but also profoundly influence global capital flows, the monetary system and the pace of economic recovery. In this changing situation where multiple contradictions are intertwined, only by grasping the policy logic, respecting debt constraints and being vigilant against the stickiness of inflation can we seek certain opportunities amid uncertainties.