I wonder if you still remember the trend of US stocks from early June to mid-June this year. At that time, the market was very scared about the Fed's accelerated interest rate hike. I mentioned above "0614: The expectation of radical interest rate hike soared, and the market panic spread! "When it comes to--
Before the end of September this year, the Fed needs to raise interest rates by 175 basis points, including 75 basis points in June this week (see the chart, that is, overnight expectations soared), 50 basis points in July and 50 basis points in September. The trigger behind all this, of course, was the higher-than-expected and previous CPI data released last Friday, and the subsequent record low of the University of Michigan Consumer Confidence Index.
In fact, we set the time node back to the present. In June and July, the Federal Reserve finally raised interest rates by 75 basis points respectively, and the market has now begun to speculate that it is possible to raise interest rates by 75 basis points again at the interest rate meeting in September, which means that,The Black Week X of US stocks from early June to mid-June is likely to repeat itself in September!
It is undeniable that after two consecutive trading days of smashing, there is indeed a demand for oversold rebound in the short term, but Xu Dao wants to remind everyone to pay attention to two things:
First, Wall Street's VIX panic index rose again.With the decline of US bond yields from mid-June to mid-August, the rebound of US stocks pushed up the market's risk appetite and made the VIX panic index keep going down. However, according to the statement of the Federal Reserve Chairman at the Jackson Hole Annual Meeting, the VIX index began to rise, and this index is still far from the high level, which means that there is still room for US stocks to continue to decline.
Second, the futures and options markets showed a surge in bears betting on the decline of US stocks.According to the latest data from CFTC, among these traders, mainly hedge funds, the net short positions of S&P 500 index futures contracts exceeded 260,000, close to the high point in June 2020.
In the previous article, "0829: The annual meeting of the central bank ended, looking forward to the next four major time nodes! "Looking forward to four time nodes for everyone, in fact, the data of the first and third time nodes still serve the fourth time node in the final analysis, and to be honest, I have a very bad feeling:Regardless of the non-farm and inflation data released in September, the Fed wants to raise interest rates by 75 basis points.
As for the logic and reasons behind it, it is troublesome to explain, but I remember that I once wrote "0615: If you can't increase supply, eliminate demand! "I have given you some explanations.
Even if you don't quite understand what I'm talking about, I sincerely hope:Every investor should prepare for the coming cold winter, because of this crisis, each of us has nowhere to escape.
It's not that I want to be alarmist, and the bond market yield is upside down. The key point is that compared with the rapidly advancing interest rate hike process, the market is actually more afraid of the unknown scale reduction. If the huge balance sheet of 9 trillion US dollars shrinks aggressively in the future, the liquidity impact on the whole financial market can be imagined.
The Federal Reserve officially started the scale reduction in June, and the monthly scale reduction limit from June to August was 47.5 billion US dollars, and this rate will double in September, and the upper limit will be raised to 95 billion US dollars, including 60 billion US Treasury bonds and 35 billion mortgage-backed securities (MBS), accounting for about 1% of the assets and liabilities.
Yes, in September, $43.6 billion of Treasury bonds in the Fed's portfolio will expire in September, which means that the Fed needs to reduce its Treasury bonds by $16.4 billion and another $13.6 billion in October. This will be the largest reduction of US Treasury bonds by the Federal Reserve before September 2023.
Up to now, the scale of the Fed's scale reduction is quite limited, only 61.9 billion US dollars, which is not only slower than expected, but also very small compared with the overall holding of securities exceeding 8.3 trillion. The current impact is actually less than the more radical interest rate hike.
But what about the future?
If the Fed is deliberately trying to drag central banks all over the world into a mud pit,
Then, no one can escape.
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