Is the market panic reasonable?
I believe that the market panic last night was somewhat of an overreaction. Although it is reasonable for assets that have risen too much before encountering unexpected negative variables to experience a decline, especially with few positive news at the end of the year. In fact, even if the Federal Reserve is 'hawkish', it is more likely to release signals of 'gradual interest rate cuts' through the dot plot, rather than turning towards tightening monetary policy anytime soon. Currently, the U.S. economy shows a certain level of resilience, but it is not in free fall. Such economic performance is sufficient to support the market's fundamentals.
At the same time, the market sell-off reflects more uncertainty about the future and misinterpretation of policies, rather than a deterioration of fundamentals. For example, although financial conditions have tightened somewhat in the past week, they remain in a loose range. The market's excessive focus on short-term changes in the dot plot has overlooked the importance of long-term economic trends, which is something to be wary of.