At 2 a.m. on September 19, that is, tonight, tomorrow morning, the Federal Reserve will have its most important performance in recent years.
Because he keeps saying that inflation has not reached our target, it has not reached 2%. So we must persist in raising interest rates and maintain higher interest rates for a longer period of time.
There is also the famous and familiar phrase that came to an abrupt end at this year's Jackson Hole Summit. Powell suddenly began to openly say a very classic sentence: It's time for police adjustment. It's time to adjust the strategy.
I said the timing of this policy adjustment is the beginning of the interest rate cut cycle. And today, you suddenly say that the Federal Reserve is not a good thing. Hey, if you don’t make this clear, the whole world will be watching you shaking your hands. Is this rate cut by 25 basis points or 50 basis points, or will it be no rate cut or even a rate hike as many people on TikTok have revealed?
I will not analyze them one by one, but just talk about the possibility of a 25 basis point and 50 basis point interest rate cut, and the changes they bring. If you look at the analysis of top investment banks, such as Morgan Stanley and Goldman Sachs, which are considered to be more authentic voices on Wall Street, they all say that 25 basis points is more reasonable.
Because a 25 basis point rate cut cycle is more like a mild rate cut cycle. It is equivalent to Powell using a loud speaker to announce to the outside world that this time we have successfully achieved a soft landing. This not only gives himself enough face, but also comforts the outside world and the market.
But in the past four or five days, different voices have emerged. Traders in the interest rate market voted with their feet, and the probability of a 50 basis point rate cut suddenly soared, reaching 71% yesterday. This means that in addition to large institutions, more ordinary traders believe that 50 basis points may be the starting point of this rate cut. Isn't 50 basis points good?
Wouldn't a bigger rate cut bring more positive stimulus? In principle, it is stimulus, but in reality, it is intimidation. Because a 50 basis point rate cut means that the Fed has to do it, and it also means that the US economy needs drastic measures to prevent it from declining, which is equivalent to indirectly admitting that it is in recession.
So do you understand the voice behind 25 basis points and 50 basis points? Or, to use a simple example, the last 50 basis points can be traced back to the subprime mortgage crisis in 2007 and 2008 when Lehman Brothers went bankrupt.
Are you surprised? Are you surprised? The last time the interest rate was cut by 50 basis points was when the Internet bubble burst in 2001. Are you relieved? The similarity is that these two interest rate cuts quickly suppressed the interest rate to extremely low levels, but failed to reverse the recession trend of the US stock market.
So the Fed may also learn from the lesson. Even if it needs 50 basis points, it will have to start with 25 basis points. After all, who doesn't like a soft landing? Li Chen has already made a comprehensive deployment of the specific point layout. For details, please see the previous post #加密市场反弹 #美降息25个基点预期升温 #大盘动态