Macroeconomics and news:
At present, the risk market in the United States has shown a cautious state. The bets on the stock market and futures market have been reduced. Everyone is waiting for the release of CPI data tomorrow.
I also said yesterday that CPI data is not the best data for reference inflation, but because the Fed officials were too hawkish in their speeches last week, if inflation pressure appears, the expectation of interest rate cuts will be greatly reduced. There may be no interest rate cuts in 24 years, but it is possible to reduce the magnitude and frequency of interest rate cuts.
In fact, at present, the abnormal data and the Fed's hawkish speeches are very much like advance preparations before the interest rate cut. We have said before that once the market expects the Fed's interest rate cut, it will bring certain trajectory changes to the US economy and risk markets.
First of all, the economy. At present, the US economic data is overheated. In fact, it is not the manufacturing industry that actually brings economic growth, and it is not even the main industry of most industries. At the same time, the employment data is also the same. In other words, once the market expects the Fed's interest rate cut, the economy will be stimulated again. The economy may overheat, leading to increased inflationary pressure, so it is a good thing to cool down before actually implementing the interest rate cut.
Secondly, in the investment market, because of the expected interest rate cut, the market will react in advance, the interest rate expectations will be lowered, and the investment return ratio will be lowered, which will lead to a weakening of risk market sentiment. We have said before that the stock market and many risk markets are the reservoirs of the Fed's interest rate cut this time. If the water in the reservoir flows out in advance before the interest rate cut actually comes, this is also the result that the Fed does not want.
So again, we can no longer reasonably judge the Fed's interest rate cut through data and Fed speeches for the time being. On the contrary, data and speeches may try to disrupt market expectations. And there will be a situation where the Fed uses data or speeches to suppress the market's optimistic expectations for the Fed's interest rate cut, and the more it is prepared to cut interest rates.
At the same time, we should also pay attention to the recent visits of the US Treasury Secretary and others. As mentioned before, the United States is using high interest rates to reduce the dimension of the global economy, and the core focus is the village. If bilateral relations ease and the United States feels that its established goals have been achieved, it will also be conducive to cutting interest rates as soon as possible.
After all, under high interest rates, the United States is also playing with fire. Either everyone will be destroyed, or you will compromise under high pressure, and I will cut interest rates. In fact, from a macro perspective, both options seem to be the most beneficial to the United States itself.
As long as tomorrow's CPI data is not higher than the previous value, as long as it proves that the united front work is effective, or even keeps the same as the previous value, it is a state of data negative but actually positive. However, it is not ruled out that, like last week, employment data will continue to suppress the market's optimistic view on interest rate cuts. Higher than the previous value, inflation work is hindered, and expectations of interest rate cuts are greatly weakened again. If this action occurs, the Fed's real interest rate cut may not be far away.
In terms of geopolitics, the United States has basically tried to get out of the Red Sea recently. Everyone has seen the relevant news. This contraction state is surprising, and it also shows that the United States is currently under great pressure, so effectively reducing its own risk losses under conflict is the best choice.
In terms of crypto market news, the United States and South Korea are currently hot topics in the crypto market. The U.S. Treasury Department is trying to increase its control over cryptocurrencies. The view is to prevent illegal activities. In fact, gaining control has always been a habit of the United States.
On the other hand, in the South Korean election, the two core competing parties have basically announced their policies on cryptocurrencies, whether it is delaying crypto taxation or encouraging restrictions on holding Bitcoin ETF assets. It seems that supporting the crypto market has become politically correct in South Korea.
For the current situation, it is estimated that the risk market and the crypto market tonight will still end in a bleak way, waiting for the data to be released tomorrow Wednesday.
