Following the announcement of the summary of the June monetary policy meeting by the Federal Reserve, the market expects that the probability of interest rate cuts by the Federal Reserve will remain unchanged in July. The probability of the Fed cutting interest rates by 25 basis points in July to 2.00%-2.25% is 73.4%, and the probability of 50 basis points is 26.6%. By September, the probability of 25 basis points to 2.00%-2.25% is 29.4%, the probability of 50 basis points and 75 basis points is 54.7% and 16.0%, respectively.
In addition, many officials believe that the risk in June is downward; one official believes that cutting interest rates will lead to financial imbalance risk.
Most members believed that economic growth and inflation risks had changed significantly in the weeks before the meeting and were now tending to decline; several members believed that if the upcoming data showed a further deterioration in the economic situation, interest rate cuts might be appropriate.
Meanwhile, Fed Brad said the Fed must focus on repositioning inflation and 2% inflation expectations; the Fed should abandon raising interest rates in December and lowering interest rates in July is an insurance measure for low inflation. If the Federal Reserve meets today or tomorrow, it will support a 25-point cut in interest rates; it is expected that another 25-point cut will be made before the end of the year; but a 25-point cut by the end of the year will depend on the economy.
In addition, he said that President Trumps Fed Governor candidate Wallers views are very close to mine; interest rate cuts are a safeguard against a sharp downturn in the economy and low inflation.
Earlier, Fed Chairman Powell testified that the June employment report did not change our policy expectations and that the balance sheet did not limit the Feds ability to implement more quantitative easing. The downside risks remain, and many members of the Federal Open Market Committee (FOMC) believe that some degree of policy easing is needed.
Risk Assets Carnival Night: Oil Price Rises More than 4%
U.S. stocks, energy, raw materials sector led the rise.
Big technology stocks in the United States collectively closed up, with Apple up 0.99%, Amazon up 1.46%, Nai up 0.28%, Google up 1.48%, Facebook up 1.77%, Microsoft up 1.02%.
Zhongquan shares ended up mixed, Alibaba fell 1.08%, Jingdong fell 0.13%, Baidu fell 0.35%; Tiandi Alibaba rose 16.28%, Yi Che rose 8.95%, Aurora rose 5.35%, pleasant loans rose 4.68%; American Securities fell 28.67%, Tektronix Feishi fell 12.07%, only goods fell 7.39%, SouFun fell 6.43%, headlines fell 5.97%.
Meanwhile, international oil prices have soared. NYMEX crude oil rose 4.22% to $60.27 a barrel and ICEWTI crude oil rose 3.66% to $59.82 a barrel.
It is worth noting that gold, a safe haven asset, has also risen slightly. COMEX gold closed up 1.46% at $1421.0 an ounce.
In addition, Treasury yields fell Wednesday after Powell signaled a rate cut. The yield of three-month U.S. Treasury bonds fell 8.2 basis points to 2.176%; the yield of two-year U.S. Treasuries fell 7.7 basis points to 1.840%; the yield of three-year U.S. Treasuries fell 5.9 basis points to 1.806%; the yield of five-year U.S. Treasuries fell 5.3 basis points to 1.831%; the yield of 10-year U.S. Treasuries fell 0.4 basis points to 2.067%; the yield of 30-year U.S. Treasuries rose 3.6 basis points. 2.578%.
How does it affect the A-share market?
On the A-share market, after the Fed released its strong interest rate cut expectations, the A50 index rose 0.54% to 13507.5 points.
According to securities firm China, logically speaking, the Feds interest rate cut has a relatively large positive effect on the A-share market.
First of all, the current incremental capital of A-share market mainly comes from foreign capital. After the U.S. employment data was released, there was a continuous net outflow of capital from the A-share market northward, and the trend of RMB continued to depreciate. However, if the Fed cuts interest rates, the peripheral market may stabilize, while the decline of the dollar index corresponds to the appreciation of the RMB, and the inflow of foreign capital into A shares may increase, which is conducive to the stability of A share market.
However, A shares are also a relatively large market affected by internal factors. In the short term, the market expects the growth rate of mid-term performance of A shares to be slightly better than that of the first quarter. Although indicators such as industrial value added and PMI show that the production and demand side are still weak, PPI in the second quarter is still stronger than that in the first quarter, and the obvious downward impact of the enterprise cost rate caused by tax reduction and fee reduction is expected. The overall performance growth rate of A shares (excluding finance) will improve slightly compared with that in the first quarter.
However, investors are still worried about the market structure. On the one hand, blue chips are above the median valuation level. On the other hand, the total amount and distribution of chips and the capital structure are also affecting market sentiment. Before the forthcoming blockbuster conference in July, the market is also watching the core spirit of the conference. Therefore, for the A-share market, at this stage, it is more likely to seek a stable equilibrium, but in accordance with the development and changes of variables, to seek the best breakthrough opportunity.
In addition, China Gold Securities said that the probability of the Fed interest rate cut determines the height of this round of A-share rebound. At the end of June, in order to maintain the stability of liquidity at the end of half a year, the central bank increased its liquidity investment; with the continuous investment of funds by the central bank, the fiscal expenditure at the end of the month increased, and the total liquidity of the market remained at a high level, with DR001 falling below 1%, and the capital level steadily crossing the half-year-end time point. Judging from July, whether the Federal Reserve will implement its first interest rate cut in July directly determines whether domestic liquidity can be further relaxed.