September Market Warning: Don't Be Led By The "Interest Rate Cut Consensus"
Right now, the market is almost one-sided— the probability of a 50 basis point rate cut in September has been pushed to 90%. However, the more unanimous the "consensus," the more hidden risks often lie behind it that are easy to overlook. Regardless of whether the rate is cut or not in the end, this September, we must stay alert and be wary of significant market adjustments or even a sudden "black swan" event.
In fact, we don't even have to wait for the final outcome; the market has already begun to "rehearse" in advance. Last month, as soon as Powell made a speech, U.S. stocks, gold, cryptocurrency, and various currencies immediately reacted. The rises and falls behind those movements are essentially funds positioning themselves in anticipation of the "rate cut expectation." However, the more this "preheating" is done, the stronger the backlash may be once the wind changes.
Specifically looking at the implementation of the rate cut in September, it is highly likely that it will not escape three scenarios, but none of them can guarantee investors will make a profit:
1. If the rate is cut by 50 basis points as expected: This completely aligns with the mainstream market judgment, in plain terms, it means "good news fully digested," and the market is likely to remain calm, making it very difficult to wait for a new market breakthrough;
2. If the cut is only 25 basis points: This is less than the general expectation, and even if it can still be considered "good news," market sentiment will shift, likely leading to a slight reversal;
3. The scenario to be most wary of is postponing the rate cut: If the September non-farm data, PPI, and CPI do not support a rate cut, Powell could very well pause the plan. It’s worth noting that this isn’t the first time the Fed has "affected the global market"; if they do pause the rate cut, global traders may have to face a collective "being trapped" reversal market.
Ultimately, regardless of which scenario comes true, it will not be easy for the market to have a good performance after the rate cut decision is announced. After all, the rules of investment markets have never changed: only a small number of people can make money, and when the majority crowd into a favored direction, it often turns into a big pit for harvesting the "leeks."
For A-shares, the current upside is already limited, and a pullback is needed to "create space." However, from an internal perspective, a clear reason for a pullback has not yet been found, and the Fed's rate cut could just become an opportunity for A-shares to "adjust with the trend"—using the volatility of external markets to complete their own rhythm switch.
