Tonight, Federal Reserve Chairman Powell will attend a hearing of the U.S. House Financial Services Committee, which will be one of the most explosive events in the market this week.
Unlike previous "technical inquiries", this hearing is likely to be highly political. Especially after Trump publicly stated that he "hopes Congress will give Powell a warning", the outside world generally expects that this hearing will be full of gunpowder.
📌 Key points of this round of hearings:
1️⃣ Will Powell send a more "hawkish" signal?
Although the Federal Reserve was slightly dovish in its interest rate decision last week, with one director even hinting at the possibility of a "July rate cut", Powell himself remained tough in his wording. He always insisted that "no rash action will be taken before seeing sufficient cooling of inflation."
And tonight, facing politically motivated inquiries (especially from the Republican camp), Powell may:
Maintaining an independent policy stance, or even deliberately being more hawkish to maintain the Fed’s neutrality
The US government evaded the question of whether to cut interest rates in July and dealt with it vaguely, and continued to emphasize "data dependence".
Refuse to accept any suggestion of "political pressure to cut interest rates"
The market should be particularly vigilant: If Powell's attitude is tougher than last week, risky assets such as U.S. stocks, gold, and Bitcoin may experience a short-term correction.
2️⃣ Geopolitics exacerbates the difficulty of inquiry
The current situation in the Middle East has escalated again, with the United States and Iran having accidental clashes in many places, and market risk aversion sentiment has intensified.
If the hearing tonight involves sensitive topics such as "international financial stability", "banking systemic risk", and "the transmission of war risks to energy and inflation", Powell will face tremendous pressure:
On the one hand, we must avoid "causing market panic"
On the one hand, we need to respond to the possibility of inflation rebounding
This will be a great test of Powell's rhetoric skills.
3️⃣ After two days of non-stop work, can Powell still “keep the rhythm”?
In addition to the House hearing tonight, there will be a Senate hearing tomorrow.
This means: Powell will be in the spotlight for two consecutive days. If the rhythm of the first game is disrupted, the second game may be even more difficult to deal with.
In a high-pressure atmosphere, the market may extract emotional points from his "any time he answers irrelevant questions or has an ambiguous attitude", causing short-term market fluctuations to be sharply amplified.
✅ Strategy Tips
Pay attention to the amplified volatility in the short term: especially the volatility of assets such as the US stock index, US dollar index, gold, BTC, ETH, etc. may increase sharply.
If Powell's attitude is tough, the market will be under short-term pressure; if he is unexpectedly "dovish", it may trigger a small rebound.
Pay attention to the rhythm of emotional trading. It is not recommended to hold a large position to bet on a direction during a period of intensive news. You can wait for market confirmation and then follow the trend.
📌 Summary in one sentence:
This is not an ordinary hearing, but a struggle between the Federal Reserve and political forces.
Can Powell maintain policy independence? Will the Fed's hawkish-dovish balance be broken? We will have to wait and see.
