The big one is coming
Currently, the market generally believes that the Federal Reserve will cut interest rates in July. However, I think the Federal Reserve may first release the signal that "there will definitely be a rate cut this year," enticing the EU and Canada to cut rates in June ahead of time.
Phase Two: The Fed's "Face Change" and the Strengthening of the Dollar
After June, if U.S. inflation remains high while the economic fundamentals are still decent, the Fed may change its tune, saying "there may only be one rate cut at the end of the year, or even no cut at all." At the same time, the Fed will stop reducing its balance sheet to support the U.S. Treasury market.
Phase Three: Geopolitical Crisis and Capital Flow
If the situation in Ukraine worsens due to delays in military aid, the Russian military may launch a large-scale offensive in the summer, rapidly advancing the front lines. Europe would thus fall into panic, and capital would begin to flee en masse, instead flowing into dollar assets as a "safe haven."
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