After the dollar surged overnight, the air suddenly became quiet, as if waiting for something to happen.
During the Asian trading session, the global market seemed to have suddenly stopped
- Highly globalized markets such as gold and crude oil have hardly fluctuated;
- The offshore RMB temporarily stopped falling, and the central parity rate set by the People's Bank of China for three consecutive trading days was significantly stronger than market expectations;
- Chinese stocks fell slightly, while Asia-Pacific stocks were mixed, looking to end a dismal week on a positive note.
- Crypto market down 4%
Judging from the market feedback, there seems to be no further feedback on the speech of Federal Reserve Chairman Powell.
No. Some details show that this speech was carefully arranged by the Federal Reserve.
1. Powell's speech time is significantly different from the past. It happened at the end of the global trading session, while in the past it was mostly during active trading hours. If it was during the opening hours of the US stock market that day, the market would have a different outcome.
2. The market did not fully understand Powell’s statement that he was “not in a hurry to cut interest rates”, and the smart Powell downplayed this statement.
His speech was prepared in advance, and every word was undoubtedly carefully crafted: there are 10 paragraphs in total, the first 8 paragraphs are foreshadowing (introducing the economy, employment, and inflation), the 9th paragraph implicitly hints that there is "no rush to cut interest rates", and the 10th paragraph cheers up the market. The most important sentence is stated as follows: When considering further adjustments to the target range of the federal funds rate, we will carefully evaluate the latest data, the economic outlook, and its balance of risks. The current economy does not send a signal that it needs to accelerate interest rate cuts, and the current strong economic situation allows us to make cautious decisions.
3. Powell wanted to prepare the market but did not want to cause panic, so he planned it carefully. But as investors, we must understand that this is a major shift for Powell. It is completely different from his domineering speech at Jackson Hole two months ago, when he said "We will never allow the job market to weaken further." We use a metaphor that is not quite right to describe his change:
The reason for the change is that his own conditions have changed, not his original intention. It is not "not wanting" but "cannot". On Friday, when we could have breathed a sigh of relief, we have to breathe a sigh of relief again. The opening of the US stock market tonight will be the most dangerous moment. If there is a drop of more than 1%, the market will magnify Powell's speech.