The most important focus this week is still the Federal Reserve's interest rate meeting. This time, there will only be a rate decision and a press conference. Essentially, there will likely be no rate cuts in May, and maintaining the current interest rate is the script. Moreover, the economic data released last week were all on the positive side, providing more reasons to remain cautious. The statements are expected to be neutral to hawkish, which is quite normal.
The main reason for the major market adjustment is still the impact of Zheng Ce, and equally important are the tariff negotiations. Early this morning, Trump stated that there would be a 100% tariff on imported films, which caused a bit of panic in the market. The US-Japan negotiations are not progressing well, threatening film tariffs, and other negotiations have just begun, all of which will raise market concerns again. There is insufficient upward momentum; last Friday, the market struggled to rise. The economic data and fundamentals last week were strong enough that the market is not worried about a recession in the short term; confidence is still there. Before the interest rate meeting, the market will remain cautious. Recently, Bitcoin is expected to perform weaker than US stocks. Generally, before major meetings, there is either a flight to safety or a wait-and-see approach.
I believe it is highly likely that there will be no rate cut in May, and there is a high probability of a rate cut in June. The key will still be Powell's speech and whether it can boost market sentiment. Once a positive sentiment emerges from such a meeting, it can basically shape the sentiment for the next month or quarter. Referring to the impact of Old Powell's speech last Christmas, it continued until Trump took office before there were any changes.
