The Fed's policy depends on the data, and several officials expressed caution last week, with no signs of rushing to cut interest rates. The latest dot plot shows that there is only one rate cut planned this year, in stark contrast to the three expected in March. Although the Fed's position on rate cuts is still unclear, the fact that major central banks around the world have already or are about to enter a rate cut cycle cannot be ignored. The Swiss National Bank has cut interest rates for the second time in a row, and the Bank of England has also signaled that it is close to cutting interest rates. Just wait for another two or three months, and market liquidity may reverse.
Both the overall consumer price index (CPI) and the core CPI in the United States fell in May, so this week the market will pay special attention to the personal consumption expenditure price index (PCE) data released on Friday to further confirm whether inflation continues to fall, paving the way for the Fed to cut interest rates. If the PCE data does show that inflation continues to fall, it may further consolidate the market's expectations of two rate cuts by the Fed this year and increase the probability of a rate cut in September (currently over 60%).
At present, the US stock market is still fluctuating at a high level, while the cryptocurrency market has experienced a period of correction, but it is also fluctuating at a high level. For the market to continue to rise, new narrative events need to emerge. It is undoubtedly crucial for the Fed to signal a rate cut, but before that, the market may still experience volatility. We need to continue to be patient and wait.
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