In 2018,After four interest rate hikesThe Federal Reserve (Fed) has cut interest rates three times this year. The three consecutive interest rate cuts occurred in July, September and October 2019, respectively, and the target range of the federal funds rate was lowered to the current 1.5% price 1.75% level.

Looking back on the past year, under the pessimism that the global economy is once again in the depths of winter, the attitude of the Federal Reserve has undergone a sharp shift from "eagle" to "dove".

The global economy slowed rapidly at the beginning of the year

Since the end of 2018, the world's major economic organizations have issued warnings, the International Monetary Fund (IMF) and the Economic Cooperation and Development (OECD) have revised down their global economic growth forecasts, and the European Central Bank (ECB) has warned of downside risks. Fed officials have also expressed concern on different occasions.

Economic data, led by manufacturing PMI, a leading indicator of national economies, continued to decline.

According to media reports, the National Association of Business Economics (NABE) findings released on 9 DecemberDisplayEconomists interviewed believe that US economic growth will slow to 2.3 per cent and 1.8 per cent respectively this year and next, down from 2.9 per cent last year.

The survey shows that the US economy is expected to continue to expand but slow this year and next, with the median forecast for year-on-year growth of real GDP in the fourth quarter of this year and next at 2.1 per cent and 1.9 per cent respectively, down from 2.5 per cent in the same period last year. Consumer prices are expected to rise 1.8% and 2% respectively this year and next, less than last year.

NABE is a professional association of business economists. The association regularly conducts economic policy surveys, outlook surveys and business status surveys. The survey was conducted from November 5 to 20 and is composed of 53 professionals.Forecast the economic prospects of the United States.。

在Federal Reserve interest rate meeting in DecemberChairman Powell (Jerome Powell) has said that this year's challenge is surprising. He said that the US economy and monetary policy are in good shape, but "it will take a substantial and sustained rise in inflation to raise interest rates."

John Williams, the Fed's "number three" and chairman of the New York Fed, said recently that monetary policy is in the right place to support the economy, and that he is optimistic about the outlook for 2020. He expects the US economy to grow by about 2 per cent next year, the unemployment rate will remain close to 3.5 per cent, and he hopes inflation will be close to the Fed's 2 per cent target.

The Fed's inflation target remains to be achieved.

Combined with the Federal ReserveThe dual objectives of monetary policy-- to promote the maximization of employment and price stability. The core personal consumption expenditure (PCE) price index, the Fed's most important indicator of inflation, recorded 1.6 per cent year-on-year growth in November, in line with market expectations, but is still a far cry from the Fed's policy target of 2 per cent.

Unemployment indicators that map the labor market show that the US unemployment rate is still at its lowest level in 50 years.

But the optimism of the jobs data cannot hide the possibility that the US economy is about to fall into recession. In mid-August 2019, the "10-2 years" Treasury yield suddenly came upside down. According to statistics, of the five upside-down alarms since 1980, four have experienced a recession within a lag of one to three years, namely, the economic crisis in 1982, the credit crisis in 1990, the Internet bubble in 2001 and the Internet bubble in 2001.Subprime crisis in 20081998 was the only time the alarm failed. It can be said that the warning of inverted US bond yields has a high degree of accuracy.

According to Cheng Shi, chief economist of ICBC International, as the "canary" of the US economy, this phenomenon has set off a loud alarm about the risk of recession. But heAlso emphasizeThis alarm is not only a signal, but also an inducementOr will realize itself through two major mechanisms.。

However, with several interest rate cuts by the Federal Reserve, the upside-down of yields on the above-mentioned maturity was eased at the end of the year. As of December 20, the spread on "10-2 years" Treasury yields was at 29BP (0.29 percentage points).

The liquidity crunch troubles the Federal Reserve

According to Xinhua News AgencyReportSince the "cash crunch" in the United States in September, the Federal Reserve has continued to stabilize financial markets with repo operations. After extending the repurchase program and increasing the repurchase scale, the Fed has "stepped up" the repurchase operation again since mid-December, launching a series of additional repurchase operations for the "New year" period when there is the most shortage of funds. In order to increase the money supply in the financial system and ease the pressure of the year-end "cash shortage", thereby stabilizing financial market confidence.

Although this temporary measure has temporarily stabilized interest rates in the repo market and the mood of financial institutions, the data show that interest rates still jump from time to time, indicating that demand for money in the US financial market is still strong.

Judging from past experience, the end of the season and the end of the year are the high incidence period of "cash shortage" in the United States. Concentrated tax pressures, payments for purchases of government bonds and relatively weak willingness of US banks to lend at the end of the year could lead to a shortage of funds in the market. However, the depth and duration of this "money shortage" has stunned many people in the industry.

The Bank for International Settlements (BIS), known as the "central bank of the central bank", released a report on the 9th of this month, saying that the important reason for this "cash crunch" is thatLarge American banksSpend more money on purchases in recent yearsUs treasury bondsThe demand for funds continues to increase.

In addition, many people in the market thinkThe "money shortage" in the federal fund marketAnd the Fed's (through the New York Fed) frequently increased its "buyback" operations, which were previously carried out by the central bank."shrinking table"The result of excess.

Federal Reserve Chairman Powell said a few days ago that the current capital shortage pressure on the market is "manageable" and believes that the Fed's action to deal with the "cash crunch" is progressing smoothly and that the pressure on funds in the market has eased in recent weeks. He also said the Fed is ready to adjust its response to market conditions.

Federal Reserve officials at a unified pace at the December FOMC meeting

It is worth noting that the December meeting resolution was the first time since June that all members of the Federal Reserve voted unanimously to reduce the number of people opposing an interest rate cut to zero from the previous two.

In addition, the "dot plot" released with the Economic Forecast Summary (SEP) shows that all committee members who do not have the right to vote agree on the interest rate decision, agreeing that the US economic data are better and that we should wait for the full effect of the last interest rate cut before there is no "substantial" change in the economy. No policy maker thinks it is appropriate to cut interest rates next year.

In June, members of the voting Federal Open Market Committee (FOMC) voted 9:1 to keep the federal funds rate unchanged, while James Bullard, chairman of the St. Louis Federal Reserve, who voted against the move, preferred to cut interest rates by 25 basis points (0.25%). This is the first time that Powell has voted against the interest rate decision since he became chairman of the Federal Reserve.

In 2020, the Federal Reserve "voting committee" will once again usher in rotation, with five governors, including Chairman Powell, and New York Fed Chairman Williams, and four local Fed chairmen complete the rotation.

TDS said the staffing of FOMC next year could make its policy point of view.Slightly less hawkish.

16:00 on the 23rd, the FedWatch of CME, an interest rate watcher, showed that federal fund pricing implies that by the end of 2020, the probability of the Fed keeping interest rates within the 1.50% color 1.75% target range is 48.1%, the probability of cutting interest rates by 25 basis points is 36%, the probability of cutting interest rates by 50 basis points is 11.5%, and the probability of raising interest rates by 25 basis points is 2.2%.

Interpretation of Sina Financial "clue Clues" FOMC Conference in 2019:

December FOMC meeting:The Federal Reserve hinted at a shift to inflation compensation strategy next year.

October FOMC meeting:The Federal Reserve cut interest rates three times this year. Powell issued a pause signal.

September FOMC meeting:Divisions among policy makers of the Federal Reserve's second rate cut this year widened

July FOMC meeting:The Fed cut interest rates for the first time in a decade. Powell said it was only a cyclical adjustment.

June FOMC meeting:The Federal Reserve cut interest rates in July. Powell says he is willing to complete a four-year term.

April / May FOMC meeting:The Fed keeps interest rates unchanged. Powell's attitude is hawkish.

March FOMC meeting:The Federal Reserve hinted that the "contraction table" of not raising interest rates this year will end in September.

January FOMC meeting:Fed doves respond positively to higher-than-expected risk assets

（Clue Clues/ Li Tao)