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What is the impact of the Fed’s interest rate cut?

LEO

Oct 25, 2021 13:27

What impact will the Fed's interest rate cuts bring to the global capital market? 

1) US stocks: short-term positive, but the US stocks still have adjustment pressure.  But the long-term trend of US stocks depends on the extent of the recession.

 2) US debt: support the bull market . The trend of 10-year US Treasury interest rates is basically the same as the rhythm of interest rate cuts, but will react in advance.

 3) US dollar: bearish dollar index. The main factor affecting the US dollar index is the relative strength of the US economy with other major countries, especially the Eurozone. The current cycle of the US economy lags behind other countries. In the future, as the US economy accelerates and the Eurozone enters the bottoming stage, the US dollar will have depreciation pressure, and the Fed’s expected interest rate cut will cause the US dollar to depreciate earlier.

 4) Gold: may caused the price of gold to rise, bull market can be expected. The price of gold is affected by the risk aversion and the US dollar.Also, the depreciation of the US dollar is good for gold. On the other hand, the safe-haven value of gold will be greatly reduced compared to the previous rounds of interest rate cuts. 

5) Emerging market stocks: short-term positive, long-term trend depends on economic conditions. The depreciation of the dollar will bring capital inflows to emerging markets, but the long-term trend of the stock market depends on the state of the economy.