Just now, Federal Reserve Governor Waller dropped two nuclear bombs, and the market exploded! Let's break it down point by point.

First, Waller clearly stated that the current interest rates of the Federal Reserve are 50 to 100 basis points above the neutral rate. What does this mean? Simply put, interest rates are already high enough and can be lowered! Even more explosive is that he said rates could be cut based solely on easing inflation prospects. This is equivalent to giving the market a reassurance— as long as inflation doesn't rebound, a rate cut is a done deal.

Second, Waller continued to sound dovish. He said that U.S. job growth has almost stalled, the impact of AI on employment is still unclear, and inflation will not accelerate again. The critical point is that the job market indicates that the Federal Reserve should continue to cut rates, and it can do so at a moderate pace without drastic actions. In plain language: rate cuts are coming, but they won't be a flood-like plunge.

Key points from Niu Ge:

Strengthened expectations for rate cuts: Waller, as a heavyweight figure within the Federal Reserve, has turned the question of when to cut into how to cut.

Once the news broke, the U.S. dollar index fell sharply, and risk assets like gold and Bitcoin surged instantly. This indicates that the market is already pricing in the expectation of rate cuts.

In the context of a shift in liquidity, the allocation value of high-volatility assets is rising. But remember, rate cuts won’t happen overnight; the market will experience repeated fluctuations.

I am Niu Ge, and during macro shifts, it's crucial to stay calm. Follow me to see the world from a trader's perspective. #巨鲸动向 #美联储降息