In the coming week, the market may be a bit chaotic. Although everyone thinks that the meetings of the Bank of Japan and the Federal Reserve will not have any major actions, recently there has been speculation that the Federal Reserve might pause its plan to reduce the balance sheet. This speculation has made market sentiment a bit complicated, and everyone needs to be more vigilant.
Next, what the market is most concerned about is the Federal Reserve's dot plot and Powell's speech. There could be several scenarios: if the Federal Reserve cuts interest rates three times while pausing the balance sheet reduction, the market might feel that the Federal Reserve is being supportive, and confidence will increase; if it only cuts rates three times but continues to reduce the balance sheet, the market might feel that the Federal Reserve is a bit conservative, and the reaction may be relatively flat; if it cuts rates twice and pauses the balance sheet reduction, the market might feel that the Federal Reserve is trying to find a balance, wanting to help the economy without being too aggressive; if it cuts rates less than twice, the market might feel that the Federal Reserve is quite confident in the economy, but may also worry about policy tightening. In short, regardless of the scenario, it will cause market sentiment to fluctuate, so be prepared.
