The market fell slightly yesterday. Although there are still speeches by essential officials, as well as some economic data releases in recent days, they are all predicting the Fed's follow-up movements, and now the Fed's undercard has been completely clear.
It is easy to increase the base rate from 0 to 4%. But an increase to 4% is already in the neutral interest rate range. Typically, maintaining a period of 4% is enough to cool down the economy and achieve the purpose of curbing inflation, so there is no need to raise interest rates sharply. Therefore, in the interest rate range of 4%-5%, please don't underestimate the 1%, it is more difficult to add than the previous 4%, and the final extreme value of the interest rate may slightly exceed 5%, but it ends there.
On Nov. 3, if the Fed hikes 75 basis points again, that will raise the base rate to 4%. It is clear that completing the final phase of rate hikes, maintaining rates in the first quarter of next year, and starting to cut rates in late 2023 or 2024. So, subsequent economic data or official speeches will impact the market. But as long as expectations for interest rates remain unchanged, the impact becomes limited.
That's why it's profitable to take a long-term long position now. Because the potential long-term bearishness is clear, open some short positions and remaining funds first to prevent the last possible drop. If it occurs, this operation can be done ahead of time. If it does not occur, then wait to see until the right side of the descending channel is broken to complete the operation.
It is easy to increase the base rate from 0 to 4%. But an increase to 4% is already in the neutral interest rate range. Typically, maintaining a period of 4% is enough to cool down the economy and achieve the purpose of curbing inflation, so there is no need to raise interest rates sharply. Therefore, in the interest rate range of 4%-5%, please don't underestimate the 1%, it is more difficult to add than the previous 4%, and the final extreme value of the interest rate may slightly exceed 5%, but it ends there.
On Nov. 3, if the Fed hikes 75 basis points again, that will raise the base rate to 4%. It is clear that completing the final phase of rate hikes, maintaining rates in the first quarter of next year, and starting to cut rates in late 2023 or 2024. So, subsequent economic data or official speeches will impact the market. But as long as expectations for interest rates remain unchanged, the impact becomes limited.
That's why it's profitable to take a long-term long position now. Because the potential long-term bearishness is clear, open some short positions and remaining funds first to prevent the last possible drop. If it occurs, this operation can be done ahead of time. If it does not occur, then wait to see until the right side of the descending channel is broken to complete the operation.