interest rate hike is a country's central bank 's interest rate hike. The purpose of interest rate hike includes reducing money supply, controlling consumption, suppressing inflation, encouraging deposits, slowing market speculation, etc. Rate hikes can also be used as a means to increase the value of the currency of the country or region against other currencies ( exchange rate ).
USD As the world currency, raising interest rates can not only achieve the above goals, but also transfer domestic hyperinflation to countries around the world to achieve the role of fleeing the world.
Federal A sharp rate hike can undoubtedly make the US dollar appreciate, and most global currencies such as the RMB, the euro, and the Japanese yen depreciate significantly against the US dollar. This is also the goal the Fed hopes to achieve. Although the US dollar interest rate hike continues, the US dollar exchange rate trend has undergone a shocking reversal.
RMB against the US dollar fell sharply to reverse and rose sharply, and offshore RMB against the US dollar rose sharply from the lowest 7.37 in October 2022 to 7.08; after , the exchange rate also rose sharply from the lowest 151.84 in October 2022 to 138.56; the euro against the US dollar rose sharply from 0.95 to 1.03; the US dollar index fell from 114.8 to 106.3.
USD index rose sharply in 2022, from $95.6 to a high of 114.8. The fundamental reason is the changes brought about by the Federal Reserve's interest rate hike . The USD interest rate has been from 0-0.25% in March to 3.75-4% in November, with the fastest rate hike in history.
The market expects that the peak of the Federal Reserve's interest rate hike in this round is between 5 and 6%. Therefore, the US dollar rate hike is still on the way, that is, the factor of the US dollar rising is still there. What is the reason why the US dollar index does not rise but falls, and the exchange rate of global currencies such as people against the US dollar has risen sharply?
haste, but it is not enough. This sentence describes the Federal Reserve's crazy and rapid rate hike. The US CPI index has gone from 9.1% in June to 7.7% in October. The 5-month value is declining, but the CPI is not as fast as the US dollar interest rate rises. Therefore, even if the interest rate hike continues to be 75 basis points or even 100 basis points in December, the US CPI data in December cannot return to within 3%.
The Federal Reserve's rapid rate hike has seriously backfired the US economy!
The tightening financial environment, the high inflation and the expectation that the Federal Reserve will have to continue hike interest rates in the future are constantly aggravating the risk of the US economic contraction. Bloomberg model deduction results released by economists show that the probability of an economic recession in the United States in the next 12 months is 100%, which means that recession is inevitable.
The Fed's inflation target is that the CPI data is within 3%. Obviously, the Fed is too idealistic. It turns out that the Fed has done a rapid rate hike, but the Fed has obviously not done it quickly lowered the US inflation level.
If the Fed raises interest rates wildly, the Fed's interest rate has risen, and the purpose of rapidly reducing CPI has not been achieved. However, the backlash on the economy has been shown in many aspects.
The huge US Treasury bond is undoubtedly a problem that the US Treasury Department has no solution at present. Moreover, US Treasury bonds not only did not decrease, but continued interest rate hikes will cause the economy to enter a recession, and the economic recession will reduce US fiscal revenue. However, it is very difficult to reduce US spending. On the contrary, it will burn high fragrance if it does not increase.
US Treasury bonds have exceeded US$31 trillion; while the US GDP in 2021 was only US$21.92 trillion, fiscal revenue was US$4.03 trillion, expenditure reached US$6.87 trillion, and fiscal deficit reached approximately US$2.8 trillion. The US Treasury Department not only did not reduce Treasury bonds, but also significantly increased Treasury bonds.
What's more terrifying is that the interest rate of Treasury bonds is synchronized and slightly higher than the interest rate level . The Federal Reserve has greatly increased the US dollar interest rate, which undoubtedly greatly increased the cost of issuing for U.S. Treasury bonds. This is also the reason why the Bank of Japan did not dare to raise interest rates when the yen depreciates significantly, because Japan's Treasury bonds are also very high.
USD interest rate has increased. For the United States, which relies on issuing new bonds to repay old bonds, debt risks are growing sharply. US 2-year Treasury bond yield exceeds 4.7%; 10-year Treasury bond yield 4.1%.
market analysis said that the current U.S. bond yield inverted rapidly widening, and is mainly due to the continuous hike of the Federal Reserve, which has led to a rapid rise in short-term interest rates, but the upward increase in long-term interest rates is still suppressed by weakening economic expectations. The deep inversion reflects that the US economy is weakening, and to a certain extent indicates that there is a high certainty in the risk of future recession of the US economy.
The future of the US economy is very bleak, but China's economy is undoubtedly growing steadily. China's economy is the main driving force for global economic growth, and contributes more to the growth of the global economy than the sum of the G7 countries; Therefore, the rise of the RMB is essentially in line with economic laws and is a correction to the Federal Reserve's distortion of the US dollar trend.
If the United States cannot suppress domestic hyperinflation and there is a terrible situation of economic recession, then the status of the dollar world currency will inevitably be shaken. Once the US Treasury bond defaults, the US economy will not be far from collapse!
2. US dollar index, Dow Jones index , Nasdaq index trend analysis
US dollar index trend belongs to the high-level volatility decline stage. After rushing to 114.8, after the 6th interest rate hike, it fluctuated and fell. Due to the decline of CPI data, the US dollar index fell below 107; the US economy entered a recession with great certainty, and at the same time, the US 310,000 Treasury bonds triggered an debt crisis, and the opportunity for the US dollar to continue to appreciate significantly decreased.
Dow Jones Index, Nasdaq Index, and S&P 500 Index rose simultaneously, small trend is a volatile rise, and the big trend is a decline relay.
At the same time, US stock leader Tesla , Amazon , Apple rose simultaneously; leading stock shares synced with the index, which means that the market continues to fluctuate and upward.
3, Shanghai Composite Index , ChiNext Index Trend Analysis
A shares ChiNext Index, Shanghai Component Index, Shenzhen Component Index, and Science and Technology Innovation 50 Index belong to the stage of fluctuating and rising adjustment, and Science and Technology Innovation 50 Index is the leading index.
index daily line rose simultaneously. Due to the sharp influence of the US stock market, the index opened significantly and opened high , but obviously the trend of A-shares is very unique. It opened high and did not end high, but opened high and fluctuated high, leading the index Science and Technology Innovation Board 50 index is opened high and closed low , slightly closing red.
new energy vehicle leader CATL and BYD was affected by Tesla's big rise and opened high and fluctuated simultaneously, and the global stock market linkage trend was very obvious!
4. Summary of Wenqutang stock market trading experience
market was born in despair and rose in hesitation!
When the stock market bottom index turns from a bear to a bull, mentality is crucial; the most suitable method for the stock market upward cycle is to hold positions in ! Especially during the period when the index starts to rise, if the mentality does not change, the profit opportunities brought by the stock price rise will be wasted!
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