Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
Author: Zhao Jinbin

The pricing of the forwards related to the Fed's interest rate decision on Wednesday local time shows that after almost completely ruling out the option of a 50 basis point rate cut last week, the probability has once again exceeded 50%. This has pushed the yield on two-year US Treasury bonds to the lowest level in two years, dragging the US dollar index to its lowest level since January this year.

The pricing reversal in the past few trading days has increased the risks for the decision on September 18. Investors are conflicted about how much policy support the economy needs and what signal the Fed's decision to start a significant rate cut and easing cycle will send.

Philip Marey, Senior US Strategist at Rabobank, wrote, "This is a tough call." He expects the Fed to cut rates by 25 basis points. "Powell's lack of guidance may indicate that the FOMC has not yet reached a consensus. More importantly, Tuesday's retail sales could still alter this calculation."

Kit Juckes, Macro Strategist at Societe Generale, said that the market could force the Fed to cut rates by 50 basis points. He added that the US retail sales and industrial production data in the coming days could influence people's views. He said that if weak retail sales push up pricing, the FOMC may be concerned about falling behind the situation.

However, some major banks have expressed caution about a 50 basis point rate cut by the Fed. Standard Chartered Bank issued a statement on Monday stating that a 50 basis point rate cut by the FOMC at the upcoming meeting could be worse than a 25 basis point cut.

The institution pointed out: "Economic data did not provide a convincing reason to cut interest rates by 50 basis points at the upcoming meeting." Standard Chartered Bank then added:" Cutting 50 basis points and making a mistake may be worse than cutting 25 basis points and making a mistake."

The bank emphasized that Powell and the Federal Reserve cannot afford to disappoint the market. The company believes that the risk of cutting 50 basis points is greater, as it could lead to an increase in unemployment in September.

Standard Chartered Bank believes that cutting 25 basis points may have an impact, and attached a clear message: "The FOMC will closely monitor the situation if interest rates are cut by 50 basis points."

Market volatility.

All of this is happening against the backdrop of increasingly tense political situation in the USA. The FBI is investigating an apparent assassination attempt against former President Trump. Just two months ago, the Republican presidential candidate was shot at a rally in Pennsylvania.

On Monday, the two-year US Treasury yield briefly fell by 4 basis points to 3.54%, continuing the uptrend after the yield plummeted from a high of over 5% at the end of April. The three major US equity index futures were mixed.

As Federal Reserve members are in a blackout period before the policy meeting on September 17th-18th, traders have little data to rely on, including the retail sales data for August released on Tuesday.

At the same time, the anticipated repricing also had an impact on the US dollar, which weakened against most major currencies over the past month. The yen is one of the currencies with the largest increase, breaking through the widely followed level of 140 yen to 1 US dollar on Monday.

National Australia Bank Limited sponsored adr strategist Rodrigo Catril said: "We believe that the Federal Reserve is about to usher in a new round of easing cycle, which is a major disadvantage for the US dollar. As the Fed relaxes monetary policy next year, lowering fund interest rates to neutral, and even below neutral, the dollar will begin to decline cyclically."

Despite a technical indicator showing that the momentum will turn bearish and support the dollar, the vast majority of the market believes that the dollar will weaken. A survey of analysts shows that by this time next year, the euro, yen, Canadian dollar, and Australian dollar exchange rates against the US dollar will all strengthen.

Editor/rice