The Federal Reserve has recently released key signals through multiple channels such as meeting minutes and public speeches by officials, with its subtle policy shift attracting heightened global financial market attention. This adjustment, interpreted by the market as a 'change in the weather,' not only impacts the dollar's movement and U.S. Treasury yields but also has far-reaching effects on global capital flows, emerging market currencies, and asset allocation logic. From the latest information released, the core clues to the Fed's policy shift center on two points. On one hand, inflation data has become a critical anchor. As the year-on-year growth of the U.S. core PCE price index gradually approaches the 2% target, some Fed officials have publicly stated that 'the trend of cooling inflation is quite clear,' and the previously aggressive rate hike cycle aimed at curbing high inflation 'is likely nearing its end.' On the other hand, the balance between economic growth and employment has become a new consideration. Recently, although the number of new non-farm jobs in the U.S. remains resilient, the unemployment rate has slightly risen, and the manufacturing PMI has been consistently below the threshold, prompting some officials to worry that 'over-tightening may impose unnecessary pressure on economic recovery,' shifting policy discussions from 'how to raise rates to fight inflation' to 'when to cut rates to stabilize growth.'
This signal has directly triggered a chain reaction in global markets. The U.S. dollar index has recently fluctuated and weakened, retreating nearly 3% from its year-to-date high as of the latest data, while non-U.S. currencies have collectively welcomed a breathing window, with the euro and pound rising against the dollar to critical levels; the U.S. Treasury market has reacted sharply, with the 10-year Treasury yield dropping more than 20 basis points in a single week, marking the largest weekly decline of the year, and a 'bull steepening' trend in the bond market has begun to appear; the U.S. stock market has shown structural differentiation, with interest rate-sensitive tech and growth stocks benefiting first, as the Nasdaq index rose over 2% in a week, while financial and cyclical stocks have been caught in turbulence due to policy expectation adjustments.
For the global market, the Federal Reserve's 'change in the weather' forecast is far from a simple policy adjustment; it also signifies that the market logic of 'strong dollar, rising rates, and pressure on risk assets' that has prevailed over the past two years may be reversing. For emerging markets, the weakening dollar and declining U.S. Treasury yields are expected to alleviate capital outflow pressures, making some high-yield emerging market bonds more attractive; for the commodity market, the expectation of dollar depreciation combined with improved global demand expectations supports the prices of assets such as gold and oil; for the Chinese market, the momentum for foreign capital to flow back into A-shares and Hong Kong stocks may strengthen, and the renminbi exchange rate will also gain more stable support.
However, the market still needs to be wary of the risk of deviation between 'expectations and reality.' Currently, the Federal Reserve has not provided a clear timeline for rate cuts, and the pace of policy shift will still heavily depend on subsequent inflation and employment data. If inflation rebounds or the economy proves stronger than expected in the future, the timing of the policy shift may be delayed, and the market's previous optimistic expectations may face correction. For investors, in this prelude to the 'change in the weather,' it is necessary to abandon unilateral betting thinking and focus more on the diversification and flexibility of asset allocation to cope with market fluctuations during the policy transition period.
