Bianco强调，目前看来，对美联储来说最重要的会议将是将于5月7日召开的下次会议——
Veteran Jim Bianco believes that the current economic growth in the USA faces multiple challenges, and the market has begun to expect the Federal Reserve to cut interest rates to address the economic slowdown. As the trend of economic growth becomes more evident, if the Federal Reserve does not cut rates at the next meeting in May, it is likely there will be no further cuts for the rest of the year.
Was yesterday's FOMC meeting just a 'rehearsal', with the next meeting being the 'main event'?
After the Federal Reserve announced its latest interest rate decision on Wednesday, seasoned Wall Street professional and President of Bianco Research, Analyst Jim Bianco, appeared on Bloomberg Television to share his views on the potential interest rate path of the Federal Reserve.
Bianco emphasized that, as it stands, the most important meeting for the Federal Reserve will be the next one on May 7—by May 7, if the Federal Reserve still cannot find a reason to cut interest rates, then they will not cut rates again this year (unless some unforeseen circumstances arise).
Bianco explained that the current slowdown in actual economic growth in the USA has outpaced the rise in inflation, and the market is already expecting the Federal Reserve to take action to address the economic slowdown.
This means that if the Federal Reserve does not take action at the May meeting, they will need to provide more reasons to support that decision. In Bianco's view, the recently held FOMC meeting was merely a 'rehearsal' for the May meeting.
Inflation remains the biggest 'roadblock' preventing the Federal Reserve from postponing interest rate cuts.
When asked how the Federal Reserve would respond if inflation reignited alongside low growth, Bianco referenced the case from last September when the Federal Reserve began the rate cut cycle with a 50 basis point cut.
Bianco stated that the Federal Reserve significantly cut interest rates by 50 basis points at that time, which was seen as "not taking the inflation issue seriously," leading to a sharp decline in the bond market.
Similarly, if the Federal Reserve insists on cutting rates to respond to an economic slowdown while inflation remains sticky, it could be interpreted as ignoring inflation, and they may face the same market reaction again.
"If you want the 10-year Treasury yield to reach 5%, then cut rates while the market is still concerned about inflation."
Bianco warned that the core inflation rate in the USA has remained above 3% for 46 consecutive months, far exceeding the Federal Reserve's target of 2%, which means that inflation risks are still very prominent.
"If they cut rates again, the likelihood of adverse reactions is very high."
China International Capital Corporation previously analyzed that if the economic downturn is just a natural downward pressure, a rapid rate cut by the Federal Reserve could solve the problem, which is not concerning; but if it also faces challenges from supply-side inflation, then the Federal Reserve can only confront a decline in growth without taking action, and may even face pressure to raise rates, similar to 2022, which is what the market is worried about.
China International Capital Corporation expects that inflation will bottom out in May, potentially opening a window for rate cuts.
China International Capital Corporation believes that the timing and path of future rate cuts depend on two major factors: the natural economic trajectory and the speed and strength of tariff policies.
Considering the current uncertainties surrounding tariffs, China International Capital Corporation estimates that inflation will continue to decline until May (with an overall CPI low of 2.6%). The reflexivity of the interest rate decline that began in January has not yet begun to manifest, thus providing a window for interest rate cuts during this period.
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Editor/lambor
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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