Global equity indexes crept up in choppy trading on Tuesday after many benchmarks touched record highs the previous session, as markets dialed up expectations that the Federal Reserve will begin cutting interest rates in coming months. U.S. Treasury yields fell and the dollar slid to its weakest level since July 4 against a broad basket of currencies, a reflection of investor bets that looser U.S. policy will ease funding costs and shift international capital flows.

The developments took place against the procedural backdrop of the central bank itself: Stephen Miran, narrowly confirmed by the U.S. Senate, was sworn in to the Fed’s Board of Governors on Tuesday morning, adding a new vote to the policymaking body ahead of a widely anticipated policy decision. While Miran’s confirmation does not by itself set policy, market participants noted that the full composition and stance of the Board will matter for the tone of guidance the Fed provides in the months ahead.

“Markets are pricing in a first cut and are adjusting positions accordingly,” said a New York-based rates strategist. “That’s pressuring the dollar and pushing risk assets higher, but there’s still sensitivity to incoming data and geopolitical shocks that could quickly reverse that view.”

Lower U.S. yields typically make dollar-denominated assets less attractive and can encourage flows into equities and other currencies, a dynamic that was evident as investors rotated toward higher-yielding assets. For emerging markets, the prospect of U.S. easing is a mixed blessing: softer dollar and cheaper external financing can reduce debt-servicing pressures and support growth, but the prospect of volatile capital movements poses political and financial risks for countries with large external financing needs.

A London-based emerging-markets portfolio manager said that while expectations of Fed easing were broadly supportive, many central banks outside the United States would be reluctant to ease policy immediately. “Local policymakers have to balance the benefits of cheaper external funding against domestic inflation and exchange-rate volatility,” the manager said. “That means divergent national responses that will shape regional outcomes.”

Currency moves also carry diplomatic and economic implications. Countries with heavy export dependency on the United States or those with significant dollar-denominated liabilities may find their macroeconomic management complicated by sudden shifts in capital flows. International law and contractual obligations tied to dollar payments can become politically sensitive if exchange-rate swings produce social strains or trigger calls for debt relief.

Analysts cautioned that the current market configuration remains fragile. Record highs and thin pre-meeting trading can amplify moves when fresh data arrive. Key U.S. indicators in the coming days—employment reports, inflation gauges and central bank commentary—will test whether the market’s optimism about rate cuts is justified or overly sanguine.

For now, investors are watching for clear signals from the Fed at its upcoming meeting and for subtle cues from newly seated officials like Miran. In global markets, where monetary policy and geopolitics intersect, the immediate calm should not be mistaken for a durable return to risk-on certainty.