Countdown to the Federal Reserve's decision! The market bets on a 97.2% probability of no action!
The Federal Reserve is about to do something big again! At 2 AM on May 8th, the time bomb of the interest rate decision will go off on schedule.
Market data is glaringly clear: 97.2% of people are betting that interest rates will remain unchanged, with only 2.8% daring to gamble on an unexpected rate cut. But don’t be fooled by these numbers; the futures market has already exploded—huge amounts of capital are frantically betting on three consecutive rate cuts in the second half of the year!
Now the entire financial circle is focused on two numbers: April's non-farm employment (an increase of 177,000) and core PCE inflation. If the inflation data surprises again, the first rate cut will definitely be delayed from June to July, and the interest rate range of 4.25%-4.5% will have to hold for another three months. To be frank, as long as there are no rate hikes, it's a win; even a delayed rate cut is still good news!
Investors need to stay sharp: the rate hike cycle has already turned the page; now the Federal Reserve’s inaction is a victory. The market has fully priced in the expectations for rate cuts, and even if the timeline is pushed back, the stock market can still rally. After all, at the crucial turning point of monetary policy, expectations are worth more than reality!
This interest rate decision is not only a barometer of monetary policy but also a mirror to examine the gap between market expectations and the real economy!