1. The Fed raised interest rates by 25bp in March. The dot matrix chart shows that it will raise interest rates six times in the year, three times in 2023, and shrink the table as soon as may, which is basically in line with market expectations. January is the most Eagle time, and the fear of shrinking the watch has been reflected in advance. After the boots landed, the market reaction was relatively positive.
2. The Federal Reserve changed the expression of employment from stable to strong. In 2022, the economic growth forecast was revised down from 4% to 2.8%, and the inflation forecast was significantly increased from 2.6% to 4.3%. The focus of short-term policy is to prevent inflation.
3. The pace of this round of interest rate increase is fast before and slow after. In the short term, the US economy is strong and inflation is high. The possibility of a single interest rate increase of 50bp cannot be ruled out. The risk of medium - and long-term economic recession has increased, and the Fed still needs to choose between inflation prevention and risk prevention and respond flexibly.
4. The details of table reduction have not been announced. It is expected that the pace of table reduction will be significantly accelerated, but the impact of liquidity will also be taken into account. The passive table reduction method of setting the upper limit of due redemption will be adopted to promote the table reduction plan in an orderly manner.
5. The impact of the last round of fed interest rate hike cycle on a wide range of assets: after the first interest rate hike and table contraction, stocks and bonds are under slight pressure in the short term, and the dollar tends to rise and fall after early appreciation. Usually, when raising interest rates for the first time, there will be an emotional impact on commodities and a short drop in prices. However, considering that the U.S. economy is still relatively strong in the early stage of interest rate increase and the support of commodity prices is still there, it will not gradually fall back until the second half of currency normalization and the acceleration of contraction.
Risk tips
Macroeconomic downturn accelerated; Large scale outbreak of geo conflict; The Fed tightened more than expected
