The Federal Reserve Leaks Signals: A Major Shift in Global Markets Has Quietly Begun
On Monday, global markets were filled with a tense atmosphere of "something big is coming": the dollar rose, gold and U.S. Treasuries initially increased then fell back, while U.S. stocks consolidated near historical highs.
On the surface, it seemed calm, but the market structure had long revealed a hint of “leakage”: the rise of the dollar almost caused all other assets to fall, as if the market had received an early “tip-off” and quietly adjusted positions before Powell's speech.
The biggest focus this week will be on Federal Reserve Chairman Powell's speech at the Jackson Hole annual meeting, and Wall Street seems to have its own expectations. Currently, the market's probability of a Federal Reserve rate cut in September has dropped to 80%, down from a recent expectation of 100%. Analysts' views have generally shifted towards a “hawkish” stance:
Citi noted that the dollar positioning indicator has shifted from a slight short to neutral, indicating that investors are taking a wait-and-see approach in the current market environment.
This means that the market has begun to gradually accept a more “hawkish” Federal Reserve. Even if Powell sends hawkish signals, the market reaction may not be overly intense; the focus of the market is not on waiting for “surprises” but rather on digesting the risk of “possible disappointments.”
Powell may not make a clear statement and may still prefer to use ambiguous language to hint at future policy directions, but considering the data from the labor market, these statements could very well become triggers for market expectations.
Strategic Thinking: How to Position in the Global Market?
Dollar Movement Focus: The strength of the dollar may exert suppressive effects on global markets. In the short term, investors can focus on the reasons behind the dollar's strength and preemptively position short on risk assets.
The Recovery of Gold? Can Gold Make a Comeback?
As the signals from the Federal Reserve become clearer, gold's performance may experience a reversal. Considering the current market sentiment, gold could see a short-term rebound.
Opportunities in A-shares: Recently in the A-share market, the Shanghai Composite Index has been fluctuating around the “3674” point. Will it usher in the next round of increases? We have conducted an exclusive analysis of the driving forces behind the Chinese stock market, and the strategic layout for the next 3-5 years is worth paying attention to.
