Powell "being blamed"? The real driving force behind market turmoil is...

Recently, the market has been highly volatile, with risk markets declining. Many have pointed fingers at Powell and the Federal Reserve's monetary policy, but is that really the case?

The FOMC's interest rate decision early last Thursday met expectations with a 25 basis point cut, but the dot plot showed internal disagreements, and the median target interest rate for 2025 was raised, with rate cut expectations lowered. Powell's remarks during the press conference were deemed hawkish; however, his concerns about inflation stem more from the uncertainties of Trump's policies rather than changes in macro indicators, and he has confidence in the economic outlook.

From a macro data perspective, the US PCE index has not shown a significant increase, the unemployment rate is stable, non-farm payroll data is growing, and GDP growth is steady, with no data supporting a resurgence of inflation or an economic recession, indicating that Powell's concerns are warranted. The main reason for the continuous decline of the Dow Jones index is the sharp drop in the weight stock of UnitedHealth Group, stemming from its CEO's attack incident, rather than systemic risk.

As for the Bitcoin reserve issue, Powell's attitude is not crucial; the decision-making power lies with Congress. The main reason for the market's violent reaction is Trump's pressure on Congress concerning the short-term spending bill alongside Musk, even threatening to eliminate the debt ceiling rule, triggering a risk-averse sentiment in the market.

The US debt ceiling is the legal limit on government borrowing, which has been suspended multiple times to respond to crises. However, the ratio of US public debt to GDP has now reached a historical high. If Trump abolishes the debt ceiling, it will impact the dollar credit system, aiming to overcome the short-term debt crisis and implement tax cuts and other policies. This move undermines the narrative that "the US relies on Bitcoin reserves to resolve the debt crisis," leading to profit-taking and risk aversion. Therefore, observing the Trump team's governance is crucial, as its influence far exceeds other factors, and the market direction may largely depend on this.