The Federal Reserve Sends Two Positive Signals

A significant positive factor in today's market comes from the Federal Reserve's easing expectations.

This expectation mainly arises from two aspects: Firstly, Federal Reserve Vice Chair Michelle Bowman expressed support for an interest rate cut in September, believing that there will be three rate cuts this year, each by 25 basis points. Previously, Federal Reserve Chairman Jerome Powell indicated that there would be a maximum of two cuts this year (around 25 basis points each), while the market generally expected one. If Bowman's assessment materializes, it would undoubtedly exceed expectations significantly. It is worth noting that this view aligns with J.P. Morgan's recent forecast, which suggests that the price increases caused by the trade war will not push up inflation, and that a rate cut by the dollar is imminent. This has also become an important reason for the strong performance of the A-shares today—Federal Reserve rate cuts are directly beneficial to global stock markets, and as an important focus for capital, the expectation of foreign capital returning has further strengthened.

Secondly, U.S. Treasury Secretary Yellen (note: the original text “Besent” is a typographical error, the correct name is Yellen) stated yesterday that she is leading the search for a successor to Federal Reserve Chairman Powell. Considering the previous dissatisfaction with Powell, it is quite likely that he will step down after his term ends (due in May 2026). The early initiation of the successor selection indicates the push on this issue, and the replacement of the Federal Reserve Chairman implicitly suggests an intention to promote rate cuts, which further strengthens expectations for rate cuts next year.

In summary, these two pieces of information together open up the Federal Reserve's expectations for rate cuts. Even if the pace of rate cuts this year is slow, there is hope for a more aggressive approach next year. Under such expectations, the capital market tends to adopt a more positive layout, especially in the stock and commodity markets, which both show favorable expectations. #美联储比特币储备