Breaking News! Major Moves in the FOMC Meeting, the Market is Going 'Crazy'!
This FOMC meeting is undoubtedly a critical turning point in the financial markets, and every action could shake the market to its core. In my view, judging from the current situation, there is a considerable possibility that the Federal Reserve will signal a dovish stance, but it will certainly weigh its decisions carefully to prevent the market from developing unrealistic expectations for an early and rapid rate cut.
With inflation continuing to cool, this lays a solid foundation for the Federal Reserve to adjust its policies. The core inflation data is performing well, significantly reducing the necessity for further rate hikes. Furthermore, monetary policy has a lagging effect, and the potential recession risks it brings are like hidden bombs that must be watched carefully. Therefore, the Federal Reserve has reason to guide market expectations through some dovish statements and prepare for a future policy shift. This is akin to adjusting the sails of a ship to the right angle in advance, so when the wind changes, the ship can continue to sail smoothly.
The Federal Reserve will not let its guard down either. Although inflation is cooling, it is still some distance from the target level. If policies are relaxed too early, inflation could easily reignite, like adding fuel to a fire that has just been put out, potentially burning even more fiercely. Therefore, I believe Powell's remarks at the press conference will be crucial. He is likely to adopt a compromise approach, affirming the achievements against inflation while emphasizing that policy adjustments must be data-driven, leaving himself enough room for flexible operations.
After the meeting, if the results are in line with or lean towards dovish, increasing holdings in interest-sensitive assets would be a wise move. Long-term U.S. Treasuries, technology growth stocks, and gold may all benefit from this, and emerging market assets might also see a revival. However, if the results are hawkish, then increasing cash-like assets and U.S. dollars while reducing high-valued growth stocks, and then waiting for U.S. Treasury yields to rise before reallocating, will help investors avoid risks and find new investment opportunities.
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