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Federal Reserve's third interest rate cut: the market responds with a crash, global assets fall into a policy fog
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On December 11, Beijing time, the Federal Reserve announced its third interest rate cut of the year, lowering the rate to 3.5%-3.75%. However, this anticipated 'market rescue' action was like a cold splash of water thrown on the market—after the resolution was announced, the Dow Jones Index plummeted nearly 800 points at one point. The market's crash reveals a cold fact: this rate cut is widely interpreted as a passive confirmation of economic worries, or a political gambit.
The market's fear stems from two major 'headwinds':
1. Inflation remains stubborn: the core PCE price index is still at a high of 2.8%, and service prices remain sticky. Cutting rates at this time may 'add fuel to the fire' of inflation that has yet to be extinguished.
2. Unprecedented political pressure: Former President Trump has repeatedly called for more aggressive rate cuts, and the selection of the next Federal Reserve chair has become a key variable in the market's bets on policy shifts. The cornerstone of monetary policy independence is shaking.
Faced with complex signals, global funds have given divided answers:
· Safe-haven assets soar: the spot gold price has surpassed $4,380, reaching a historical high, indicating that funds are rushing into 'hard assets' seeking refuge.
· Risk assets plunge: tech stocks collectively fall sharply, with funds withdrawing from overvalued sectors.
· Bond market signals yellow light: the yield on 10-year U.S. Treasuries remains stable at over 4.1%, indicating that long-term inflation expectations have not dissipated.
Who do you think will be the real winner in this game, gold or cash? Will the independence of the Federal Reserve come to an end? Leave your views in the comments.
