After the U.S. stock market opened yesterday, there was a slight drop, and Bitcoin also followed with a correction, currently fluctuating around $94,000.



From the market news perspective, I haven't seen any obvious negative factors.

The only notable news is that Trump plans to impose a 100% tariff on imported films, but the impact of this is limited.

Why is the market not panicking about Trump's movie tariffs?

This is mainly because foreign films account for less than 10% of box office revenue in the U.S., and the entire film industry only accounts for 1.5% of U.S. GDP. This level of tariffs has a negligible impact on the economy.

The tariffs mainly affect streaming platforms like Netflix and Amazon Prime; these platforms' costs may rise, but the overall market impact is minimal.

Currently, the fluctuations in U.S. stocks mainly rely on the tech and AI sectors, and movie tariffs have no connection to these.

Will the Treasury auction drain market funds?

This week, the U.S. is set to auction 3-year, 10-year, and 30-year Treasury bonds. In the current environment of high borrowing costs, selling bonds may reduce the amount of money in the market.

If the auction is booming, it indicates strong demand and stable interest rates, meaning the market is fine and fluctuations will not be large. But if the auction is poor, with weak demand and soaring interest rates, the market may panic, worrying about potential issues with U.S. debt.

How serious are the consequences? The bond market may plummet, U.S. stocks will also be affected, risk assets like Bitcoin will suffer, dollar volatility will increase, and it may even force the Federal Reserve to step in.

Fortunately, the recent Treasury auctions have been relatively reliable, with the 10-year Treasury bonds selling quite well.

However, recently there have been fewer foreign buyers of short-term Treasury bonds, possibly due to uncertainties about the short-term economy.

Therefore, the results of this week's auction may affect short-term price trends.

What will Powell say at the Federal Reserve meeting?

In the early hours of Thursday, the Federal Reserve will have a meeting. It is basically a done deal that there will be no interest rate cut in May; everyone is more concerned about whether there will be a cut in June or July.

According to CME data, the probability of not cutting interest rates in May is 97.6%, while the probability of not cutting in June has risen to 69.8%.


Recent GDP and non-farm payroll data have also led the market to believe that the Federal Reserve will not rush to cut interest rates in the short term.

The idea of not cutting interest rates has already been digested by the market, so it doesn't count as a negative factor.

What really makes investors anxious is what Powell will say.

Former Federal Reserve official and current Goldman Sachs chairman Kaplan recently mentioned in an interview with the Wall Street Journal Powell's statement from 2022: To bring inflation down to 2%, we may have to accept an economic recession.

The U.S. economy is doing okay right now, mainly because the government is spending money lavishly. But now the government is starting to save money, which may increase economic risks.

Kaplan believes that the Federal Reserve will continue to let the data speak, and unless the economy clearly declines (such as a recession), it will not easily cut interest rates.

He thinks that there may only be two interest rate cuts in 2025, and the Federal Reserve will wait for risks to emerge before intervening, rather than acting preemptively.

This meeting will not have economic forecasts, only interest rate decisions and a press conference.

I think Powell is likely to be hawkish, emphasizing that there is no rush to cut interest rates and maintaining a wait-and-see approach.

If he says that the inflation caused by tariffs is only temporary, the market should be able to accept it. But if he completely rules out cutting interest rates, market panic will intensify.

However, it is fortunate that last week's U.S. economic data was decent, providing the market with some confidence, so there is not too much concern about a recession in the short term.

What will the market do next?

In the short term, the market will continue to be driven by macro events, and market sentiment is easily influenced by news.

Although there are no major negative factors this week, the results of the U.S. Treasury auction may trigger short-term fluctuations.

Powell's statements at the Federal Reserve meeting on Thursday will also be crucial; if Powell leans hawkish, the market will be more cautious.

Moreover, U.S. stocks have risen quite sharply recently, and the optimistic sentiment has already been digested, so there is a short-term need for correction.

Risk assets like Bitcoin and tech stocks lack upward momentum in the short term.

Unless there is unexpectedly good news, such as the Federal Reserve hinting at an interest rate cut, a super successful Treasury auction, or breakthroughs in tariff negotiations, the market is likely to fluctuate in the $93,000-$98,000 range.