The current market rhythm is indeed quite uncomfortable, with a trend characterized by a slow decline that wears one down. The lack of accelerated downward movement means there is a lack of clear technical signals, which can easily lead traders to hesitate or even lose their balance. The core logic behind this is still the repeated disturbances in interest rate cut expectations. Previously, Harmak publicly stated that he does not support a rate cut in September, which directly suppressed market optimism, causing the CME's probability of a rate cut to fall back to around 75%, leading to a cooling of risk appetite.
Tonight's Jackson Hole annual meeting is undoubtedly key. Powell is very likely to continue to insist on a 'data-dependent' stance and will not release a clear policy direction for September in advance.
Looking back at recent cycles, the significant movements in the US stock and cryptocurrency markets have almost always been accompanied by clear policy drivers or macro events. Last year saw elections and consecutive rate cuts, 2023 is characterized by ETF expectations, 2020-2021 was marked by a massive liquidity influx, and 2017 was the year CME futures were launched. This year's market performance has not followed the usual seasonal patterns, instead presenting a rhythm of 'deep adjustments in February, March, and April, followed by strong rallies in May, June, July, and August.' Whether the rally can continue into the fourth quarter largely depends on the market expectation management after the September meeting.
If there is really no rate cut in September, the market's short-term reaction is likely to be a disappointing drop, especially for sentiment-driven assets which might take a hit. But looking a bit deeper: First, the reason the Federal Reserve is not in a hurry to act essentially indicates their confidence in the resilience of the US economy, which means that the fundamentals have not truly deteriorated; Second, the Fed still holds over 400 basis points of policy space, and once the economy shows clear signs of weakness, they are fully capable of quickly cutting rates to support the market. In other words, delaying a rate cut does not mean 'not providing support,' but rather 'keeping some bullets in reserve.'
From a funding perspective, once the market is hit by disappointment, it will instead create a better position and valuation range. Historically, similar situations, such as the pandemic shock in early 2020 or the phase of panic after aggressive rate hikes in 2022, often provided long-term funds with cheaper entry opportunities. Especially in the current context of increasing institutionalization, long-term funds are more inclined to increase positions during certain declines rather than chase prices at high levels.