From December 16 to 17, global financial markets were in turmoil! On one side, Federal Reserve officials suddenly released 'hawkish' signals, dousing expectations for easing; on the other side, Trump accelerated the selection of the Federal Reserve Chairman candidate, who will be interviewed on Wednesday; combined with the heavyweight data showing the U.S. unemployment rate hitting a four-year high, the gold market initially dropped then surged sharply, while U.S. stocks showed mixed results, with every signal affecting investors' nerves!
1. The Federal Reserve's 'hawkish' surprise: Beware of excessive rate cuts, inflation risks are mentioned again
Just as the market was immersed in the easing atmosphere of three consecutive rate cuts, Atlanta Fed President Bostic suddenly 'turned hawk' and made a key statement:
- Although the labor market is cooling, a significant slowdown is not expected, and economic resilience remains;
- After years of failing to stabilize the 2% inflation target, it may 'damage the credibility of the Federal Reserve,' and caution is needed against overly loose policies;
- Further interest rate cuts will bring monetary policy close to or into an easing range, which may pose a rebound risk for inflation and inflation expectations.
This statement breaks the recent 'dovish consensus' among Federal Reserve officials, especially against the backdrop of the US unemployment rate rising to its highest level since October 2021 in November. The 'hawkish' tone is particularly surprising. It is worth noting that the market had previously bet on a cumulative rate cut of 55 basis points by 2026. Bostic's remarks have directly prompted the market to re-evaluate the pace of interest rate cuts, temporarily suppressing the upward momentum of risk assets.
2. Trump accelerates layout: interviews candidates for Federal Reserve chair, adding variables to policy direction
The Federal Reserve's personnel changes welcome new developments—Trump will interview Federal Reserve Governor Christopher Waller on Wednesday, making him a potential candidate for the next Federal Reserve chair. Currently, this 'Federal Reserve chair race' has shown a clear shift:
- Former Federal Reserve Governor Waller replaced Hassett as the frontrunner for the nomination, with Kalshi data showing his nomination probability rising to 47%, while Hassett fell to 41%;
- The interview process is progressing rapidly, but Trump is still weighing options; there is a possibility of delays or cancellations.
- The core contradiction focuses on 'policy independence': Trump has always been dissatisfied with the insufficient rate cuts by the Federal Reserve, even suggesting that interest rate decisions should consult the president's opinion, while Hassett previously clearly supported the Federal Reserve's independence, indicating a hidden divergence from Trump's position.
The personnel changes are a game of policy direction. If Trump ultimately favors a candidate who 'aligns with White House policy,' the pace of future interest rate cuts by the Federal Reserve may be forced to accelerate; if a candidate who insists on independence is elected, the degree of easing may maintain the current cautious stance, which has become one of the biggest uncertainties in the current market.
3. Market reacts sharply: gold rises sharply above 4300, US stocks show mixed performance
Under the collision of multiple messages, global assets show significant anomalies:
- Gold market: Spot gold opened slightly lower before rising sharply, firmly standing above 4300 USD. Although the Federal Reserve's 'hawkish' signals exert short-term pressure, the high unemployment rate combined with geopolitical uncertainties continues to highlight gold's safe-haven properties, making it a 'safe haven' for funds;
- US stock market: The three major indices showed mixed results, with the Dow down 0.62%, the S&P 500 down 0.24%, and the Nasdaq up 0.23%. Weighty stocks like Johnson & Johnson and UnitedHealth Group dropped over 2%, leading the Dow down, while Tesla rose over 3% and Facebook increased by more than 1%, with tech stocks performing strongly supporting the Nasdaq;
- In terms of Chinese concept stocks: The Nasdaq Golden Dragon China Index fell slightly by 0.34%, but individual stock performance was clearly divergent, with Pony.ai rising over 7%, Hesai Technology and Kingsoft Cloud up over 2%, and some quality Chinese concept stocks still favored by funds.
4. Key prediction: Easing expectations are cooling, but the overall direction remains unchanged
The current market is in a complex pattern of 'hawkish statements + personnel games + data divergence':
- In the short term, the combination of 'hawkish' comments from the Federal Reserve and the uncertainty regarding the chairperson candidate may lead to increased market volatility, and risk assets may enter a period of adjustment;
- In the long term, as the US unemployment rate rises and economic growth still requires policy support, the overall direction of the Federal Reserve's easing cycle has not changed, but the pace of interest rate cuts may become more cautious;
- For investors, gold still holds allocation value as a safe-haven asset, while US stocks need to focus on technology stocks and other growth sectors, while also being cautious of short-term corrections triggered by policy changes.
The content is for reference only and does not constitute investment advice!
