During his visit to South Korea, US President Donald Trump said he will not let the Federal Reserve raise interest rates. He announced over $18 trillion in new investments, expecting this to reach around $21 or $22 trillion by the end of his second term. He also predicts a 4% GDP growth in the next quarter, highlighting the revival of US factories. Semiconductor manufacturing is coming back, and there’s a plan to boost the shipbuilding industry. Trump emphasized that economic security is crucial for national security, with trade policies driving new investments. A trade deal with South Korea is expected, and talks with Chinese President Xi are on the horizon.

The Role of the Federal Reserve

The Federal Reserve (Fed) oversees US monetary policy to keep prices stable and ensure employment. It adjusts interest rates to affect the value of the US dollar. The Fed holds eight meetings each year to decide on policies. Quantitative Easing involves buying bonds to increase credit availability, which can weaken the dollar. Conversely, Quantitative Tightening stops these purchases, potentially strengthening the dollar. Lallalit Srijandorn wrote this article. After living in France since 2019, he is now based in Paris and Bangkok as a digital entrepreneur. Markets move quickly, and FXStreet offers insights through its newsletter. Looking ahead to October 29, 2025, the President’s comments shine a light on the Fed’s independence. Recent data from September shows inflation at 3.8%, still above the 2% target, giving the Fed a strong reason to consider tightening policies. As traders balance political pressure with economic indicators, we can expect increased market volatility. This uncertainty opens up opportunities in interest rate derivatives. With the current Fed funds rate between 5.00% and 5.25%, the President’s suggestion to pause rate hikes is significant. Traders might look at strategies like purchasing straddles on Treasury note futures, which allow profit from large price changes whether the Fed remains firm or yields to pressure.

Impact on Equity Markets

The outlook for 4% GDP growth seems very optimistic, especially compared to the Q3 2025 estimate of just 2.1%. While lower rates usually support stock prices, this contrasting outlook calls for caution. Traders could consider using call options on the S&P 500 to gain exposure to potential gains while minimizing downside risks. The US dollar is facing two strong but opposite forces. Normally, a halt in rate hikes would weaken the dollar, but the announcement of $18 trillion in new investments creates significant demand for it. This conflicting situation suggests that trading options on the US Dollar Index (DXY) could be a smart way to navigate expected market volatility without betting on a specific trend. Certain sectors, like semiconductors and industrials, seem ready to gain from these policies. For instance, the Philadelphia Semiconductor Index (SOX) has already increased over 15% in 2025 due to reshoring news. Looking at call options on industrial ETFs could directly benefit from the “booming factories” narrative in the coming weeks. Create your live VT Markets account and start trading now.

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