Starting from 2021, the Federal Reserve seems to be fighting an economic war every June, frantically sending out hawkish signals.
June 2021 meeting: The upward movement of the Federal Reserve’s “dot plot” seemed to have fired the first shot in the interest rate hike, marking the beginning of the withdrawal of the ultra-loose monetary policy.
June 2022 meeting: The Federal Reserve fired a direct shot, raising interest rates by 75 basis points and significantly raising interest rate expectations.
June 2023 meeting: The Federal Reserve hinted that it would raise interest rates twice more, and it felt like it had its ammunition ready and was ready to fire at any time.
June 2024 meeting: It is estimated that interest rate expectations will be raised again, even the long-term neutral interest rate expectations, as if the war machine is already running at full speed and ready to charge at any time. For the stock market, the cryptocurrency circle, and gold, in recent years, the Federal Reserve seems to be declaring war every June, constantly raising interest rates, forcing the market to dance up and down.
The June FOMC meeting will be held at 2:00 am Beijing time on Thursday. This meeting is still very important for the current non-volatile market. The basic situation is that inflation continues to exceed expectations + the job market is strong + the economy continues to grow; the Fed may raise interest rate expectations + unemployment expectations + inflation expectations + lower GDP expectations.
Interestingly, the slightly higher unemployment rate and slightly lower GDP have given way to inflation, indicating that the Fed has a strong desire to combat inflation. The labor market is still strong and economic growth is not slow, which allows the Fed to find a dynamic balance in the battlefield of high interest rates, allowing inflation to slowly decline and gradually reach the 2% target.
Of course, the May CPI report is also very critical, and the market is expected to experience large fluctuations. The volatility of the S&P index may be greater than or equal to 1.5%, and traders are also using various methods to hedge and deploy their forces on the battlefield to meet the enemy.
Now, let’s summarize a few points.
1. US inflation stubbornly exceeded expectations, especially at the beginning of the year, which was more likely to rise, which may be related to seasonal factors;
2. The U.S. economy is also stronger than expected. The recession signal that began in mid-2022 has not yet materialized, and the GDP growth rate in the second quarter seems to exceed expectations again;
3. The Fed wants to tighten more after early misjudgment, and economic employment and inflation also support tighter tightening. If it relaxes, it may continue to make mistakes;
4. The market's reaction may also be gradually dulling. The current main line is still no recession + AI. Interest rates and inflation are secondary factors. Unless it is too tight, there will not be much impact.
At this meeting, Powell will give the clearest hint yet on the timetable for rate cuts. Although the non-farm data exceeded the target, the previous data showed a recession, and Powell's speech should be dovish. We continue to wait for the CPI report and the Fed meeting. We suggest that you adopt a conservative defense mode. If you have a position, continue to hold your position. If you don't have a position and want to get on the train, please place the following order for the pin.
The current cryptocurrency market needs to lower expectations and seek stability. The secondary market is not easy to invest in. ZK and Blast are about to issue coins. In the near future, you can pay attention to the meme coins on the new public chain.
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