With a decision to cut interest rates still hours away, the market's focus is on the decision of the US Federal Reserve (Fed) this time.
Looking back, the last rate hike was in July last year. After the rate hike, the market went through a period of adjustment that lasted for several months, "as long as the horizontal is, as high as the vertical is", and then the market began to rise sharply. One of the factors driving the growth at that time was the expectation that the rate hike cycle was over and the expectation of a rate cut began.
At present, the high interest rate of 5.5% has been maintained for nearly a year, and a rate cut is imminent. However, market expectations have been exploited quite a lot, so it is unrealistic to expect a sharp price increase immediately after the rate cut.
Now, what needs more attention is the extent of the economic downturn. If the interest rate cut is 25 basis points, which shows that the Fed thinks the economic situation is still stable, the market may still have some hope.
If the rate cut reaches 50 basis points, or even the pace of future rate cuts is 50 basis points or more, the situation will not be optimistic.
This could mean that there are real data and serious problems that we have not yet grasped, forcing the Fed to cut interest rates sharply.
Normally, the Fed only cuts interest rates aggressively when the economy is in trouble. If there is a real problem, when the news is released, the market price will usually fall sharply first. After a sharp cut, the Fed may cut interest rates wildly, but in the short term, multiple rate cuts may not be accepted by the market.
At present, global prices are also not low, generally at a high level, there is still much room for decline, so we need to stay vigilant and mainly observe.
