In the current complex and volatile economic environment, every fluctuation in the U.S. market affects the hearts of investors. Especially regarding the Fed's monetary policy adjustments, the market reaction is often forward-looking, but there is also a lack of over-interpretation. Based on the latest market dynamics and Treasury trading data, there is a view that the Fed could cut interest rates as many as six times in the coming year, a situation that has historically only occurred during periods of deep recession, such as the global pandemic in 2020 and the financial crisis in 2008.
However, comparing this to past historical conditions, we find that the market may be overly pessimistic. The Fed's current official attitude is that there could be three rate cuts this year, totaling 75 basis points, which is far from the extreme ** of the market. In our view, despite the many challenges facing the US economy, its resilience should not be underestimated, and the pace and magnitude of rate cuts are likely to be more prudent and orderly.
Looking at the US market in December last year, we can find that the market sentiment has a tendency to be overly optimistic. In particular, the rapid growth of the Nasdaq index has made the market have certain expectations for a correction in January. This suggests that while the market may remain uncertain in the near term, it also provides an opportunity to find solid investment opportunities.
Investors should remain calm and patient in the face of the current market volatility. The overtrading phenomenon in the market reminds us to be cautious about forward-looking information, while paying attention to the Fed's policy guidance and the reality of economic fundamentals. On this basis, it will be a wise choice to find a suitable investment time and make a long-term layout.
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