➤ Interest rate cuts and market conditions

Some friends still have questions about why interest rate cuts will cause a fall.

Let me make an analogy:

The interest rate cut is to stimulate the economy, which can also be compared to the interest rate cut as the medicine for the economy.

Economic downturn is like people getting sick. First of all, they rely on immunity. If the immunity is really unable to resist, the condition will not improve or even become more serious. At this time, you need to take medicine.

After taking medicine for a period of time, the condition will improve. But when you first take medicine, it may be the worst time of the disease.

This is why everyone cares about non-agricultural and CPI data, and when interest rates will be cut. Because before and after the interest rate cut, there is a high probability of bargain hunting.

➤ Interest rate cuts and US stocks

Another premise here is that the US stock market has risen sharply for almost 3 consecutive months. So when the interest rate is cut, the US stock market is likely to fall with a high probability.

Of course, the currency market may have fallen in advance, and speculators in the currency market are relatively more sensitive. But this does not mean that the currency market has completely fallen.

➤ CPI and interest rate cuts

Tonight's CPI did release a positive sentiment. When the mood stabilizes tomorrow, Brother Feng will analyze the market's expectations for interest rate cuts. Today, we will mainly talk about CPI.

All four CPI ratios are lower than expected.

Among them, the most representative CPI annual rate has fallen back to 3.0%. This is the lowest CPI level since April 2021.

However:

On the one hand, the CPI has fallen significantly, but the core CPI has not actually fallen significantly. The expectations for the core CPI are the same as last month, including the monthly rate and the annual rate.

The core CPI is an indicator that is more relevant to the livelihood of the Republic of China. The core CPI annual rate is in a downward channel. Whether it is necessary to continue to decline is also one of the important factors that the Federal Reserve needs to consider.

On the other hand, the data we see is unseasonally adjusted data, that is, data that has not been seasonally adjusted.

We often say that the fifth month is poor, the sixth month is desperate, and the seventh month is turning over. It is not only about the US stock market, but also related to the US real economy.

Most importantly, the method of seasonal adjustment will affect the data results. The use of this method leaves room for the US Bureau of Labor Statistics.

➤Written at the end

CPI has greatly changed the expectation of interest rate cuts, and the market sentiment is positive in the near future. There may be a small rebound in the near future, first see if 58,000 can be broken, and then 60,000.

However, in the short term:

First, there is still a small selling pressure on the German government's BTC.

Second, whether it is a rate cut in September or November, the short term is not optimistic. As discussed above, a rate cut may lead to a decline.

Third, on July 31, the Federal Reserve FOMC meeting may show when to start cutting interest rates, September or November or December. Brother Feng still prefers November. If there is no rate cut in September, expectations will be frustrated, and negative sentiment will form again.

In addition, referring to Brother Feng's top post, the rate cut after continuous high interest rates has a higher probability of bubble bursting and collapse in history. It is not advisable to go all-in at this time, beware of the "bull return" emotional signal 😂, and leave appropriate positions for black swans.