When the Fed cuts interest rates and releases water, the bull market will come...

Let’s talk about the Federal Reserve. The Federal Reserve has two core functions. The first is to control prices, which is what everyone usually calls CPI. The second is to ensure employment! Employment refers to two data, the first is the unemployment rate, and the second is non-agricultural employment data.

The CPI is generally released between the 12th and the 14th of each month, and the non-farm payroll and unemployment rate are generally released on the first Friday of each month. Both data are released once a month, and these data are It is a key factor in the Federal Reserve's decision whether to adjust monetary policy!

The Federal Reserve’s current round of interest rate hikes began on March 16, 2022, and the Fed continued to raise interest rates by 25, 50, 75, and 75 in March, May, June, July, September, and November 2022, respectively. , 75, 75 basis points, with a total of 425 basis points of interest rate hikes, raising the federal interest rate fund target from 0-0.25% to a range of 4.5-4.75%. As of now, the U.S. federal benchmark interest rate is 5.25% to 5.5%. The yield to maturity of the 10-year U.S. Treasury bond reached 4.98%, and the 30-year bond reached 5.11%

Such a high rate of return can naturally attract risky assets. After all, a market worth tens of trillions of dollars can bring a sense of security! ! Since 2023, economies led by China and Japan have been selling off the U.S. debt in their hands. On the one hand, the supply of U.S. debt exceeds demand, and there is a big bubble in the market. On the other hand, the United States has repeatedly raised the ceiling on U.S. debt. There may be a possibility that it won’t be enough in the later stages!

At present, the Federal Reserve has decided to suspend raising interest rates in order to achieve a soft landing for the economy. However, if the CPI rebounds retaliation again, the probability of the Federal Reserve continuing to raise interest rates will increase. This is not a good thing for risk assets!

The October CPI data recorded 3.2%, which is better than expected. If this situation continues, it is expected that from April to May next year, the Federal Reserve will start to cut interest rates and release water, and the risky investment market will usher in fresh blood... ...