On the 12th, the Fed discussed the interest rate
In addition to unanimously maintaining the interest rate unchanged, the statement also implied that it would not raise interest rates in 2020, and it would only raise interest rates once in 2021.
The United States will not raise interest rates for at least one year in the future, which will facilitate the flow of carry trade funds to emerging markets. Hong Kong stocks are also favored and there is a chance for further rebound.
In the middle of this year, the market is still worried that the U.S. economy will be in a recession, the U.S
Treasury yield curve is upside down, and the 10-year bond yield fell to 1.45% in early September. With the Federal Reserve cutting interest rates three times in a row, the US economy has clearly improved. Last Friday, the United States announced an increase of 266,000 non-agricultural jobs in November, better than the market’s expected increase of 183,000, and the unemployment rate fell to 3.5%, the lowest level in 50 years.
Before negotiating interest rates, although market participants have estimated that the Fed will stay on its feet, they are still worried that the Fed will signal a rate hike
Fortunately, this time the Fed Chairman Powell sold a good man and no longer emphasized interest rate hikes and delistings, so as not to provoke Trump’s dissatisfaction. Powell emphasized at a press conference after the conference that in the future, before considering raising interest rates, he will tend to let inflation pick up and keep the inflation rate above the 2% target. In other words, even if US inflation rises above 2%, the Fed can tolerate it without rushing to raise interest rates.
The Fed keeps the federal funds rate target unchanged at 1.5% to 1.75%, and the latest interest rate intention bitmaps given by the Fed board members show that the interest rate at the end of next year will be 1.6% and 2021 will be 1.9%. In other words, the Fed is unlikely to change interest rates in the next year, and it will only raise interest rates by 0.25% in 2021.
What investors like most is this loose environment with low interest rates (1.5% to 1.75%) and stable prospects (at least one year will not raise interest rates), especially when the economy is good (the unemployment rate is 3.5% 50-year low), fund managers can borrow affordable funds and hype.
Emerging stock markets in Northeast Asia generally rose yesterday as a result of the influx of Carry Trade into emerging markets. The Hang Seng Index rose 1.3%, Taiwan’s weighted index rose 1.2%, and South Korea’s KOSPI index rose 1.5%.
Since the Hong Kong dollar exchange rate rose sharply yesterday and broke through the 7.8 mark, it has risen to the strong side for the first time in five months. It can also confirm that new water has flowed into Hong Kong, and has been flooded by funds with emerging markets in Northeast Asia.