The U.S. currency turned sharply lower on Friday and stocks recovered, largely as Wall Street Journal chief economics reporter Nick Timiraos wrote that the Fed officials are scrambling for another 75 basis point rate hike at their November meeting, where they may discuss whether and how to signal a small rate hike in December. Watch how their moves this year are slowing the economy and reducing the risk of causing an unnecessarily sharp slowdown. Therefore, the market's expectations for the pace of Fed rate hikes have been adjusted, and fund managers currently have very high cash holdings
Fund managers' cash holdings have reached their highest level in 21 years, with average cash level at 6.3% in October, up from 6.1% in September and well above the long term average of 4.8%, according to Bank of America's long-term monthly survey of portfolio managers. With a growing number of people expect a policy shift: 28% expect short-term interest rates to fall over the next 12 months, up from 14% in September.
If a fund manager suddenly finds itself lag behind the market's rally, and together with the fund managers' high cash holdings, they will be forced to scramble buying and the stock market will rebound faster.
In the short term, the Nasdaq is technically oversold, coupled with the cash holdings of fund managers and the market sentiment change in the Fed's interest rate hike expectations. But in long run, the damage fundamentals is unlikely to improve as the Fed slows rate hikes. Expecting the stock market to pull back eventually after the rebound.
In recent weeks, the Federal Reserve has been pouring dollar liquidity into other central banks around the world, doubling the liquidity swap line provided to the Swiss National Bank almost every week, reflecting that the strong dollar has already caused some damage to market liquidity.
On October 19, the central bank liquidity swap operation record on the official website of the New York Fed showed that the Fed continued to conduct a total of US$11.3 billion in US dollar liquidity swap operations for the Swiss National Bank, the European Central Bank and the Bank of Japan, mainly providing 110.9 billion for the Swiss National Bank in liquidity.
Weekly chart of the NASDAQ Index. The chances of the NASDAQ Index finding a short-term low in the week of October 10 increased, which is the 0.618 Fibonacci level pullback from the low in 2020 to the high in December 2021. Stochastic is also oversold, and it is expected that the Nasdaq will have a chance to test 11800 to 12200.
Fund managers' cash holdings have reached their highest level in 21 years, with average cash level at 6.3% in October, up from 6.1% in September and well above the long term average of 4.8%, according to Bank of America's long-term monthly survey of portfolio managers. With a growing number of people expect a policy shift: 28% expect short-term interest rates to fall over the next 12 months, up from 14% in September.
If a fund manager suddenly finds itself lag behind the market's rally, and together with the fund managers' high cash holdings, they will be forced to scramble buying and the stock market will rebound faster.
In the short term, the Nasdaq is technically oversold, coupled with the cash holdings of fund managers and the market sentiment change in the Fed's interest rate hike expectations. But in long run, the damage fundamentals is unlikely to improve as the Fed slows rate hikes. Expecting the stock market to pull back eventually after the rebound.
In recent weeks, the Federal Reserve has been pouring dollar liquidity into other central banks around the world, doubling the liquidity swap line provided to the Swiss National Bank almost every week, reflecting that the strong dollar has already caused some damage to market liquidity.
On October 19, the central bank liquidity swap operation record on the official website of the New York Fed showed that the Fed continued to conduct a total of US$11.3 billion in US dollar liquidity swap operations for the Swiss National Bank, the European Central Bank and the Bank of Japan, mainly providing 110.9 billion for the Swiss National Bank in liquidity.
Weekly chart of the NASDAQ Index. The chances of the NASDAQ Index finding a short-term low in the week of October 10 increased, which is the 0.618 Fibonacci level pullback from the low in 2020 to the high in December 2021. Stochastic is also oversold, and it is expected that the Nasdaq will have a chance to test 11800 to 12200.