Markets have basically priced in that the Fed is going to cut rates in September.

The probability of a Federal Reserve interest rate cut in September 2025 is now at 84.6%. Since December 2024, the Federal Reserve has held interest rates steady between 4.25% and 4.5%

Why?

• Jobs are cooling off: Hiring has slowed, unemployment crept up a bit, and wage growth isn’t putting pressure on inflation anymore.

• Muted tariff impact: The much-feared inflation bump from trade frictions hasn’t really shown up. Supply chains are holding up better than expected.

• Rates have been stuck: The Fed hasn’t moved since December 2024, keeping it at 4.25–4.5%.

Who benefits the most when rates are cut?

When the FED lowers rates, anything tied to cheap money or lower borrowing costs tends to do well.

• Real Estate & Home Builders → Lower rates reduce mortgage costs, making it easier for buyers to qualify for loans.

Home builders have been lagging all year, and now they’re starting to catch up.

So, here are a few names worth watching:

Home Depot ($HD), Lowe’s ($LOW), Sherwin-Williams ($SHW), Zillow ($Z), TopBuild ($BLD), M/I Homes ($MHO)

Other sectors worth noting:

• Gold & Precious Metals → They benefit from falling yields and act as a hedge when monetary policy gets looser.

• Crypto → Crypto thrives on liquidity and a “risk-on” mood usually push digital assets higher.

• Small-Cap Stocks → These firms often depend more on affordable financing, so cheaper money helps them grow.

• Tech & Growth Stocks → Their long-term cash flows look more attractive when the discount rate falls.

• Emerging Markets → A weaker dollar makes debt easier to manage and draws foreign investors back.

Coincidentally, these have been some of the best-performing asset classes this year.

The top two: Bitcoin & Gold