First, let’s look at the key points in the market’s next round of game-playing: there’s a 55% probability of a rate hike in October. Right now, it’s a fifty-fifty situation, and going forward, these expectations will be continuously contested as the overall macro environment evolves—for example, geopolitical conflicts and how U.S. inflation performs.
And in terms of the real situation, the thing that ultimately determines the “stopping point” of this round of U.S. rate hikes is actually geopolitical conflict.
At present, tensions around the secondary conflict (U.S.-Iran) have somewhat eased—Saudi Arabia has said it is stepping up efforts to repair the oil pipelines. However, before the midterm elections, that is, before November 3, it may be difficult for any major changes to occur in these two months. In other words, oil prices will likely remain at high levels.
High oil prices → inflation won’t cool down → another rate hike may still be needed going forward → not until next year (2027) will there possibly be any easing in conditions such as rate tightening and global tightening.
So what should we do ourselves?
Let’s state the conclusion upfront: from now to the fourth quarter of this year, based on the information we currently know, our investment environment is still in an externally relatively tight one.
Under such a tightening environment, it’s hard for the market to sustain a run of consistently good performance. Especially now that the 10-year Treasury yield has already risen above 5%, which is an absolute high-yield zone. The financial markets will show a certain fragility, and unexpected events could happen at any time.
$MSFTB
And in terms of the real situation, the thing that ultimately determines the “stopping point” of this round of U.S. rate hikes is actually geopolitical conflict.
At present, tensions around the secondary conflict (U.S.-Iran) have somewhat eased—Saudi Arabia has said it is stepping up efforts to repair the oil pipelines. However, before the midterm elections, that is, before November 3, it may be difficult for any major changes to occur in these two months. In other words, oil prices will likely remain at high levels.
High oil prices → inflation won’t cool down → another rate hike may still be needed going forward → not until next year (2027) will there possibly be any easing in conditions such as rate tightening and global tightening.
So what should we do ourselves?
Let’s state the conclusion upfront: from now to the fourth quarter of this year, based on the information we currently know, our investment environment is still in an externally relatively tight one.
Under such a tightening environment, it’s hard for the market to sustain a run of consistently good performance. Especially now that the 10-year Treasury yield has already risen above 5%, which is an absolute high-yield zone. The financial markets will show a certain fragility, and unexpected events could happen at any time.
$MSFTB