Introduction: Recently, the United States has suffered a sudden and large increase, which has caused confusion and doubts among investors around the world. The reason for this is related to the Fed's policy shift. This article will focus on the Fed's policy changes and their impact on U.S. stocks, further the performance of the U.S. Treasury liquidity crisis and its impact on the market, and analyze it with relevant examples and data.
In recent years, the United States has been plagued by an inflation crisis, and the Federal Reserve has been forced to raise interest rates 11 times to curb inflation, with the goal of keeping inflation below 3% and avoiding falling into a "stagflation" crisis. However, due to the better-than-expected US inflation data in October and other economic data, Fed Chairman Jerome Powell announced a pause in interest rate hikes at the December 13 interest rate meeting and hinted that internal discussions have begun on interest rate cuts.
For the market, a pause in rate hikes and rate cuts are both good news. As a result, U.S. stocks have continued to be ** recently, with the Nasdaq index exceeding 15% since the end of October. However, the recent Fed** has shown a different voice. The president of the Chicago Fed and the president of the Richmond Fed have successively said that although the current inflation is well controlled, the 2% target has not yet been reached, so they are reluctant to discuss the issue of interest rate cuts too early. This uncertainty has raised doubts about the future direction of the Fed's policy.
In addition to the change in the Fed's policy, the U.S. bond liquidity crisis is also one of the important factors that led to the sudden ** of U.S. stocks. The results of the latest auction of US Treasury bonds showed a slight increase in the interest rate on the 20-year Treasury note due to a lack of demand. This means that the demand for US Treasuries is weak and liquidity is in question.
At the same time, both the overseas demand index and the domestic demand index of US Treasuries hit new lows, which further exacerbated the liquidity crisis of US bonds. The U.S. Treasury market dived and interest rate data rose, which in turn affected the performance of the U.S. market.
To sum up, the Fed's policy shift and the U.S. Treasury liquidity crisis have had an impact on the U.S. market. Expectations for a Fed rate cut were dashed, and liquidity issues in U.S. Treasuries added to investors' concerns about the market outlook. This led to a sudden crash in the US stock market.
However, it is important to point out that the current inflation is under control and it is only a matter of time before the Fed cuts interest rates. For the market, the key is also to address the issue of US Treasuries and the credit of the US dollar. If the Fed does not address these issues, the credibility of the US economy and dollar hegemony will continue to decline. In addition, U.S. sanctions and threats against China may slow China's development, but the process of de-dollarization and the internationalization of the renminbi will spread around the world.
In short, the Fed's policy shift and the U.S. Treasury liquidity crisis have adversely affected the U.S. market. However, investors need to remain calm and pay attention to the movements and changes in the market, as well as the impact of various macro and micro factors. At the same time, for individual investors, it is necessary to pay attention to diversifying investment risks, formulating reasonable investment strategies, and doing a good job in risk management.