In its most recent move, the Fed announced a 25 basis point increase in interest rates to 475%-5% level. The decision seems unexpected, especially in the wake of the Silicon Valley Bank crisis, with many tech investors and banking leaders calling for the Fed to pause its rate hikes. However, instead of increasing the attractiveness of the dollar as expected, the rate hike led to a sharp decline in the dollar index, which fell sharply against the yuan by 500 basis points.
This anomaly may be due to the decline in global market confidence in the US dollar, which has led to a sell-off in dollar-denominated assets. Even if the Fed continues to raise interest rates, it will not be able to stop the market from taking a bearish attitude towards dollar assets. This may also explain why Yellen changed her stance after raising interest rates, announcing that she would no longer provide guaranteed support to Bank of America, and why Blinken hurriedly dispatched ** to break into China's Xisha territorial waters.
Finance mistakenly believes that Powell and Yellen are at odds, probably because they don't realize who they actually serve. Powell serves the Federal Reserve, which is actually an instrument of the Wall Street financial plutocracy. The top priority of the U.S. Treasury Department, which Yellen currently manages, is the untouched U.S. Treasury debt to delay the default crisis. Yellen, as the former Fed chair, no matter how her identity changes, cannot change the fact that she actually serves the financial giants of Wall Street.
Under normal circumstances, the Fed's interest rate hike will cause global dollar funds to flow back to the United States to buy high-interest dollar financial assets. However, Yellen's behavior before and after the rate hike suggests that her real purpose is to force depositors in small and medium-sized banks to move money to the big investment banks and big banks, which are what she and the Fed really serve.
After the collapse of Silicon Valley Bank, depositors at small and medium-sized banks moved their money to big banks such as Morgan and Citigroup, either to buy cryptocurrencies and U.S. Treasuries, or to invest in China and its surrounding areas. For Wall Street, moving money to big banks and buying U.S. Treasuries is in line with Yellen's goals, but for buying cryptocurrencies and investing in China and its surrounding areas, Wall Street believes that it is unacceptable.
As for the reason for Blinken's dispatch ** into the territorial waters of the Paracels, it may be related to the massive withdrawal of global capital, especially Asian and Chinese capital, from the financial markets of the United States and Switzerland to prevent uncontrollable factors and loss of wealth. The move gives the impression that the situation in the South China Sea is unstable and could have an impact on the financial attractiveness of coastal cities in the South China Sea, such as Hong Kong and Singapore.
On the international stage, China is demonstrating its rise as a global power by brokering a rapprochement between Saudi Arabia and Iran and a peace effort over the Russia-Ukraine conflict. These actions suggest that global distrust of the dollar has become a general trend, despite the various strategies that the United States** may employ to manage expectations. China's rise is unstoppable.