Sister Bei's most failed trade this year was defeated by Powell.
This year, the worst trade I made was betting early on the Fed's interest rate cut expectations. I thought I would see a rate cut by the beginning of the year, but who would have thought that I would be waiting until now, and the rate cut is still undecided. The whole trading rhythm has been disrupted by this man, Powell, you have really messed me up!
However, at 10 PM tonight, everything seems to be turning a corner! The global capital markets are focused on Jackson Hole, Wyoming, where Federal Reserve Chairman Powell will deliver his final speech as chairman at the global central bank annual meeting. This is not an ordinary speech; the theme of the address is "U.S. Economic Outlook and Review of the Monetary Policy Framework," which means Powell will review the evolution of the economic policy during his 8 years at the helm of the Fed, summarizing his achievements and shortcomings.
Looking back at Powell's tenure, during the pandemic in 2020, he changed the U.S. inflation target to a flexible average inflation targeting framework, allowing U.S. inflation to temporarily exceed 2%. As a result, inflation surged like a runaway wild horse, soaring above 10%. The Federal Reserve could only urgently enter a rate hike cycle, frantically hitting the brakes. This series of actions has turned the global financial markets upside down, causing investors' emotions to rise and fall.
Last August, at the Global Central Bank Annual Meeting, Powell's statement "It's time to cut interest rates" was like a giant stone thrown into a calm lake, stirring up countless waves. On September 18, the Federal Reserve cut interest rates as expected, and surprisingly cut it by 50 basis points. The US stock market soared at the news, and our A-share market also experienced a surge after September 24, with global stock markets entering a bull market frenzy. That scene still excites people to this day.
This year's storyline is astonishingly similar to last year's. From January to August, the Federal Reserve remained inactive, accumulating everyone's expectations for interest rate cuts for the upcoming September meeting. Will Powell provide a clear expectation for interest rate cuts like last year? In my opinion, the possibility is slim.
First, let's look at the economic situation. The inflation problem in the United States still harbors hidden dangers. The impact of tariffs on prices has not yet fully manifested, and inflation in the service sector is also stagnant. Powell has always acted cautiously, and now the market's pricing on interest rate cuts is overly optimistic. He is likely to take action to suppress this expectation, regaining the initiative on interest rate cuts from the market and Trump, firmly controlling the narrative. After all, in the face of a complex economic situation, he will not easily relent.
Looking at the pressures faced by the Federal Reserve, events such as internal budget overruns on renovations and the accusations against Governor Cook are continuously occurring, and the independence of the Federal Reserve is being subjected to ongoing political interference. Powell has always been tough, emphasizing the independence of the Federal Reserve externally. In this situation, in order to maintain the authority of the Federal Reserve, he is likely to exhibit hawkish tendencies, dousing the market with a bucket of cold water.
Next, the non-farm payroll data, PPI data, and CPI data for August will be the key determinants of the final interest rate cut expectations. If the data is positive, the expectation for a rate cut may still persist; if the data is poor, then the rate cut might be postponed again.
Is it a blessing or a curse? Let's witness Powell's "farewell speech" together at 10 PM tonight, to see how he concludes his term and where he will lead the global financial markets! #加密市场反弹#