The probability of a 50BP rate cut this week has surpassed the probability of a 25BP rate cut, which means that the market has finally understood Powell's idea, and that Powell is much more rational than most people in the market. Last week, I said that I wanted the interest rate swap to fall back a bit to bet on an unexpected rate cut, but NICK called it back as soon as the market closed. After that, CPI exceeded expectations and I wanted to fall a little more, but NICK called it back again... It shows that my idea is right, or I am too greedy.

Then the amount of this rate cut is still a secondary issue. The core issue is the future rate cut path. No matter how much the rate cut is this time, it is a good thing if the rate cut is getting slower and slower (indicating that the economy is stable), and it is a bad thing if the rate cut is getting faster and faster (indicating that the rate cut is forced to accelerate). The reason why I think 50BP is a positive is that the probability of accelerating the rate cut this year has decreased with this 50BP rate cut, so it is a positive, but it does not mean that there will be no recession. The core is still the employment market data.

Finally, because the rate cut increases the probability of a soft landing, it becomes a combination of rate cut + soft landing. Do you remember what I said two months ago? Good for small and medium-sized stocks! But one thing to remember here is that the market is just rekindling expectations of a soft landing, but it is only an expectation, not a necessity. So whether it can continue to rise depends on the subsequent data. If the data is still average after a wave of rise, then it will still be volatile (people walking their dogs)