Article source: Juheng Buy Fund
Message Express:
The Fed chairman said there would be no three-yard rate hikes in the next few meetings and the U.S. economy was far from a recession, trying to reverse market expectations and soothe sentiment. However, following a single-day rise, US stocks ushered in a series of sharp declines. US growth and technology stocks have fallen by nearly 10% since May 4, and have fallen 23.9% and 22.4% respectively this year (S&P 500 Growth and S&P 500 Information Technology). stocks).
Juheng buy fund view:
1. The Fed succeeds in guiding interest rate hike expectations to fall
The market currently expects a 50.2% chance of the federal funds rate falling between 2.50% and 2.75% by the end of the year, and a 39.2% chance of falling between 2.75% and 3.00%. Compared with the forecast a week ago, the probability of 2.50% to 2.75% increased by 14%, and the probability of 2.75% to 3.00% decreased by 14.3%. The Fed succeeded in reducing the market’s forecast for the federal funds rate by the end of this year from above 2.75% to below 2.75% (two rate hikes in the next two meetings and one rate hike in each of the last three meetings). Falling below 4% for the rest of the year gives the Fed a chance to successfully suppress inflation without causing a recession.
2. Unlike the bond market, the stock market sees a recession
At present, the 10-year U.S. Treasury bond yield and the U.S. 3-month bond yield in the next 18 months are 3.0% and 3.3%, respectively. The U.S. 3-month bond yield is still only 0.9%. Spreads or forward spreads on short-term rates are well above 0%, and the bond market still doesn’t see a recession-leading signal. Unlike the bond market, the stock market is already in panic mode of recession. In addition to the technology stocks that led the decline earlier, steel, aviation and consumer finance stocks also fell sharply, leaving only the more defensive utilities. Business and consumer staples stocks were relatively resilient.
3. The Fed wants to replicate the 1994 rate hike pattern
The “Jumbo Buy Fund”‘s claim that raising interest rates will inevitably lead to a recession is not correct. The Fed is trying to replicate the successful experience of raising interest rates in 1994. In order to combat the rogue inflation, the Fed raised the federal funds rate from 3% to 6% from February 1994 to February 1995. In the following five years, the manufacturing purchasing managers’ index has twice fallen below the watershed between prosperity and decline, and capacity utilization has fallen. Although consumer confidence has once declined, consumer spending has maintained strong growth. The United States is also experiencing a decline in the inflation rate. while avoiding a recession.
Juheng Buy Fund Investment Strategy: When the stock market falls irrationally, it is most suitable for regular fixed amount
The irrational fall in the general sell-off in stocks is usually seen only when the U.S. economy is poised for a recession. However, judging from the current expectations of the bond market and interest rate market, the US economic recession signal has not yet emerged. Now it is likely to replicate the rapid return of funds to the US market following the sudden and rapid rate hike in the United States in 1994. Experience with strong performance (from April 1996 to August 1997, the US dollar index appreciated by 13.8%, the emerging market stock market and the US stock market fell 52.2% and rose 46.3% respectively), it is recommended to use regular fixed batches when the market is irrational. US stock market.
Strong market volatility, should the investment layout turn? Juheng experts fully answer:
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