The United States** suddenly plummeted, and the Nasdaq index fell by 15%, to the confusion and surprise of global investors. The reason for this event is related to the Fed's policy shift. Recently, with the good performance of US inflation data in October and November, and the economy is about to enter a "soft landing" state, the market expects the Fed to slow down the pace of interest rate hikes, which has driven the continuation of US stocks**. However, at the December 13 meeting, Fed Chair Jerome Powell announced a pause in rate hikes and hinted that the possibility of a rate cut had begun to be discussed internally, and the market began to ** the Fed will start a rate cut cycle. However, the recent divergence between other Fed statements and Powell's position has made the market's expectations for Fed policy uncertain, triggering a situation in US stocks.
In addition, there was also a liquidity crisis in the US bond market, which put additional pressure on the market. The latest 20-year Treasury auction did not turn out well, and the lack of demand led to the winning bid rate reaching 4.213%, which is lower than the previous interest rate level, but still shows weak demand for U.S. Treasuries. At the same time, domestic and foreign demand indices have also reached new lows, making the liquidity problem of US Treasury bonds more and more obvious. This situation has further exacerbated the market's concerns about the Federal Reserve and U.S. stocks, and has also become one of the important factors leading to ***.
Behind the US stock market**, the ambiguous attitude of the Fed's policy is the key to market panic. Although Powell has announced a pause in interest rate hikes and the Fed is widely expected to cut interest rates, other Fed statements** send different signals. Some ** believe that while the current inflation situation is good, it has not reached the 2% target level, so they are reluctant to discuss a rate cut too soon. Against this backdrop, uncertainty has arisen in the market's expectations for Fed policy, leading to ***
At the same time, Powell's attitude is also unstable, which further adds to the uncertainty in the market. Some experts believe that other Fed presidents may be acting more rationally, arguing that they should not act too soon until inflation falls back below 2% to avoid another stagflationary crisis. They argue that if a recession does occur, it can be reversed by lowering interest rates, and that cutting interest rates while the inflation crisis is still unresolved is tantamount to hiding a long-term chronic hidden danger in a healthy body. As a result, the Fed's uncertain attitude has also led to panic in the market.
Overall, the Fed is facing challenges and addressing the liquidity problem in US Treasuries, and the trend of de-dollarization is accelerating. The liquidity woes in U.S. Treasuries and weak demand for U.S. Treasuries have left the U.S. economy facing a series of problems. If the Fed fails to address these issues, the credibility of the dollar's hegemony will further decline, and sanctions and threats against China and other countries will continue to increase. Therefore, the process of internationalization and de-dollarization of Chinese people's currency will spread globally, and more and more countries will join the wave of de-dollarization.
To sum up, the U.S. stock market is mainly due to the market panic caused by the Fed's policy shift, and the market has begun to doubt the Fed's attitude towards interest rate cuts. At the same time, liquidity issues in the U.S. bond market have also exacerbated market uncertainty. Both the Fed's challenges and the trend towards de-dollarization have had an impact on U.S. equities.