There have been many voices in the market about the Fed cutting interest rates, but why is the market still pessimistic? Today, we will answer this question and reveal the real situation behind the US dollar's rate cut.
1. The holder of the decision-making power of the US dollar interest rate
First of all, we need to be clear that the actual decision-makers of the US interest rate decision are not Biden ** nor Congress, but the big capitalists and big chaebols behind them. They have the real power to decide the interest rate on the dollar, which is the most crucial fact of this war, or the game.
2. The Fed's decision-making and market voice
Fed Chairman Jerome Powell has repeatedly stressed that they only look at US economic data and do not listen to the market, and are cautious about decision-making. However, we need to understand that Powell does not know the final answer, and can only be perfunctory and ambiguous. But he knows the attitude of the big bosses behind him, so he keeps sending the message of "hawks". One of the reasons why the market is pessimistic about this is the true attitude of these big capitalists and big chaebols.
3. Pessimism in the market
Although most institutions will start cutting interest rates in 2024, the timing will be after the middle of next year, which shows that the market does not have a clear confidence in the timing of interest rate cuts. This pessimism stems from the uncertainty of the market about the current situation.
U.S. Treasury Secretary Janet Yellen reiterated her call for the Fed to cut interest rates on December 12, noting that inflation is falling significantly, wage growth is healthy, and rising real interest rates could influence the Fed's interest rate decisions. However, the Fed did not waver from this, insisting on looking at economic data from the United States.
1. A clear signal from the market
The market has given the Fed two clear signals. First, the recently announced US non-farm payrolls rose by 19 in November90,000 people, and the unemployment rate fell to 37%。This data shows that the economy is still hot and the labor market is still strong, so it means that interest rate hikes are needed. However, the second data shows that inflation is falling again, falling for several months in a row. This contradiction in the data has led to confusion in the market about the Fed's decision-making.
2. The divergence between the US dollar's interest rate hike and the economic situation
The relationship between the dollar's interest rate hikes and the U.S. economy and employment is driven by two different systems. The U.S. economy and jobs have been driven by Biden's fiscal deficit for several years, while the U.S. dollar rate hike is an attempt to maintain the dollar's strength. This divergence has led to difficulties in understanding the U.S. economy.
3. The maximum pressure and future outlook of the US dollar interest rate hike
The US dollar interest rate hike is a means of maximum pressure with the aim of maximizing the global interests of the big capitalists and big chaebols behind the United States. Therefore, the Fed will not stop raising interest rates until the limit is reached. What Powell said about looking at US economic data is actually to see whether the limit has been reached. As a result, we don't think the outlook for a rate cut in the US dollar is so optimistic. Even without raising interest rates, the US dollar will remain high and aim to maintain a strong US dollar.
We agree with Goldman Sachs that the US dollar rate cut will not be large until at least after the third quarter of 2024. This is just to calm market sentiment. Everything is because of China's strength, how can Americans sleep peacefully in the face of this reality?
In the market, there is an endless stream of ** and analysis of interest rate cuts for the US dollar. Despite the recent clear signals, the market remains pessimistic. This phenomenon is related not only to the Fed's decision-making attitude, but also to the economic situation in the United States and the market's uncertainty about the decision on the US interest rate. In addition, the author believes that behind the US dollar interest rate cut, there are hidden interests of the big capitalists and big chaebols in the United States, as well as the impact of the dollar on the global economy. Therefore, it is still necessary to be cautious about the rate cut of the US dollar. In the current situation, China's strong economic strength is also an important factor.