Summary of Key Macroeconomic Events:
1. Bank of America bankers have reaped substantial profits assisting Chinese companies in their overseas expansion. Hong Kong's stock market has raised the highest amount of IPO funds globally this year (Hong Kong stocks）。
2. Washington is set to ease regulatory oversight on Wall Street institutions, unleashing $2.6 trillion in liquidity for lending entities (including traditional banks) with a focus on the AI supply chain, directed towards data centers, energy, and other sectors.Trump is easing some of the tightened policies imposed on the banking sector since 2008. Analysts predict this move could boost earnings for US equities.35%。
Future signal: Trump will further relax regulations on Wall Street,The dual easing measures will support stronger economic data in the second half of the year and sustain the ongoing bull market,however, latent risks are present but are expected to remain manageable until 2027).
Next week's FOMC meeting!
The Federal Reserve has publicly stated its decision to pause the reduction of its balance sheet in the coming months.Powell's concession (which can signify Bessent's success in using fiscal policy to influence monetary policy, as well as Trump's success in personnel intervention; the U.S. over-issuance of short-term debt is being offset by fiscal measures to address the bond shortfall).
Why is the market so certain about an interest rate cut?
Economic Data: U.S. employment growth has shown signs of weakness, while some Fed officials believe that inflation is under control, with an expected inflation rate of approximately 2.5%. Under the dual mandate of 'fighting inflation' and 'protecting employment,' easing monetary policy is the only viable option.
The influence of the Trump faction within the Federal Reserve. A precautionary rate cut indicates that the Fed aims to proactively address potential downside risks to the economy, particularly in the labor market.
How the market might react before and after the rate cut...