💥Breaking! June Fed Rate Cut Expectations Soar

There's been some big movement in the financial circle! Recently, discussions about a rate cut by the Fed in June have been heating up 🔥, so let's have a good chat about it today～

📊 First, let's look at the data. According to CME's "FedWatch Tool", the probability of maintaining the interest rate in June is as high as 91.7%, while the probability of a 25 basis point rate cut is only 8.3%. However, not long ago, traders had completely digested the expectation that the Fed would cut rates in June; this expectation was as thrilling as a roller coaster 🎢.

So why is there this expectation of a rate cut 🧐? Recent weak economic data and easing inflationary pressures have led the market to reassess the Fed's monetary policy. With increasing uncertainty in the global economy, a rate cut is seen as a "secret weapon" to stimulate economic growth. Once rates are cut, liquidity will increase, borrowing costs will decrease, and companies may be more willing to invest in expanding production. Consumers may also feel more confident to take out loans for consumption, which is a significant boon for economic recovery 💪.

However, things are not that simple. The rising expectations of a rate cut have also triggered some concerns. On one hand, excessive reliance on rate cuts raises worries about whether the economic fundamentals are too weak, especially since many places still have relatively high levels of debt. On the other hand, if these expectations change, the financial markets can become volatile. The stock market may rise due to reduced funding costs and improved economic expectations, but market volatility and uncertainty have also increased, potentially leading to a significant adjustment. As for the bond market, yields typically fall and prices rise. In the foreign exchange market, the dollar may depreciate, affecting global trade and capital flows.

For us investors, this situation is crucial. If the Fed really cuts rates in June, investment strategies will need to be adjusted accordingly. For instance, it may be worth considering an increase in the allocation of growth stocks, as rate cuts are beneficial for the development of these companies. In terms of bonds, long-term bonds might be a good choice, since yields will decrease and bond prices will rise. But if the rate cut expectations do not materialize, the market might have to "shake three times" again, so everyone must closely monitor the Fed's policy statements and adjust investment strategies in a timely manner based on economic data 🙌.