The current market dynamics are confusing, but there is an old saying that goes, "There must be something wrong when things are out of the ordinary."
Despite the market's strong calls for rate cuts, the United States continues to implement a high interest rate policy. This high interest rate environment makes global economic participants feel on thin ice. Many US bonds and mortgages are no longer sustainable, and the challenges facing the economy are becoming increasingly severe.
In response, Japan has been quietly selling US bonds to save itself. At the same time, some commercial real estate mortgage bonds in Europe and the United States have also suffered losses. The Federal Reserve has been very cautious in this process, carefully testing the market reaction and trying to cool down the hidden dangers buried in the past. I think it is impossible for the United States to maintain high interest rates all the time, because the continuous expansion of debt will eventually force it to appropriately relax monetary policy. At present, the Federal Reserve is also considering the option of a rate cut in September.
2024 is already halfway through, and the currency circle has gradually exploded since November last year, reaching a high point in April this year. Despite this, there is still a lot of money waiting and watching, which means that the market has not yet reached a high point that fuels the flames, and the market is unlikely to end here. From historical experience, it only takes one month to pull the market up, while a crash may last for three months.
Therefore, I think that people should not panic sell in the current market trough. The market will only get better slowly. I don’t think the market is dead because capital has not retreated.