This Wednesday, US Stocks experienced a super strong interest rate decision-day market trend, with the Dow Jones Industrial Average reaching its largest single-day increase since 2020; however, who would have thought that just 24 hours after the strong market, the US Stock market dramatically changed overnight, suffering its largest reversal since the onset of the pandemic, resulting in the biggest single-day decline of the year.
The market reversal and increasing volatility have left investors hanging in suspense, with the steps of the Federal Reserve's interest rate hikes and balance sheet reductions compounded by the tumultuous and fluctuating international situation. Where will the market go? Will it continue to bear?
Faced with persistently high inflation, the current turbulent international situation and the ongoing adjustments in US Stocks since the end of November 2021 have drawn more attention from investors to this interest rate meeting.
On May 5th, Beijing time, the Federal Reserve announced the decision from the May interest rate meeting: raising the target range of the policy interest rate, the federal funds rate, from 0.25% to 0.50% to 0.75% to 1.00%. This is the first time the Federal Reserve has raised interest rates by 50 basis points since May 2000, and it is also the first time since 2006 that interest rates have been raised in two consecutive meetings.
What chain reactions will the Federal Reserve's aggressive interest rate hikes and balance sheet reduction policies bring to the Global capital markets?
1. What is an interest rate hike? What is balance sheet reduction?
While everyone is discussing "interest rate hikes" and "balance sheet reduction", every investor in the market must be clear and targeted, first they should understand the relevant basics...