美國4月CPI、PPI雙雙迴落！加息週期結束？
Is the U.S. Rate hike Cycle Over? These assets and sector investment opportunities deserve attention!
Starting in March 2022, in order to curb the rising inflation of enterprises, the Fed launched this round of rate hike. After 10 consecutive rate hike, the US interest rate level has increased from the zero interest rate era to now 5.25%.
Inflation in the US did fall on schedule. The latest CPI data from the US showed that the CPI in May 2023 was 4.9%, lower than the market expected 5%. This also means that CPI levels in the US also decline 10 times in a row.It also means that the market has already ended the market for the United States rate hike cycle has ended, perhaps about to become a reality.
In the previous rate hike period that lasted up to 14 months, the US dollar index was like a rainbow, US stocks and Hong Kong stocks fell sharply, and the bond market was bearish, and non-US currencies were unbearable.Overall, the market environment is unsatisfactory.
So as the US rate hike cycle enters an end, the market environment will change. What assets or markets will usher in investment opportunities and are expected to bring higher returns to investors?
First, the stock market. This may also be the most concerned. Expectation of the end of the rate hike is undoubtedly positive for the stock market.
Because the higher the interest rate, money funds and other risky varieties are more popular, funds will be outflow from the stock market. And now if the rate hike ends, at least there will be no more money out of the stock market, the downside pressure of the stock market will be reduced a lot.
But for different plates, the degree of interest at the end of the hike is different.Among them, the greater the level of positive is technology stocks or growth stocks.
On the one hand, valuations of technology stocks or growth stocks are particularly sensitive to interest rate levels. In the interest rate hike environment, valuation levels continue to decline.
On the other hand, some early growth companies do not have enough cash reserves. To scale up, they have to finance from outside, so they rely heavily on external financing environments. In the environment of continuous interest rate hike, financing costs are too high and difficult to finance, without sufficient funding support, these companies can be difficult to grow quickly or even face a financial crisis. And now the interest rate hike is coming to an end, their situation will also improve, perhaps will usher in the performance continue to grow of inflection.
That is to say, with the end of the rate hike cycle, technology stocks or growth stocks may usher in a double increase in valuation and performance Davis double click, the investment opportunities are very worthy of attention.
However, it should be noted that the Fed ends the rate hike does not mean that interest rate cuts will be opened immediately. Markets expect that the Fed will start to cut interest rates by the end of 2023 as early as possible. A high interest rate environment of 3% or more may continue for a year or two, and the US economy may continue to recession for a period of time in the high interest rate environment.
Therefore, at the end of the hike, but still in the transition period of a high interest rate environment, the investment style is best to be stable and avoid stocks that have financial risks,To pay attention to growth stocks with mid-size or above market capitalisation, or technology related ETFs.
Second, the bond market.The Fed's continued rate hike, the impact on bonds is the most direct, and the end of the rate hike, bond benefit is of course the most direct. Because the price of a bond is inversely proportional to the market interest rate. Why is that?
For example, a national debt with a face value of $100 and one year due, and assuming there is no residual dividend, that is, the money that comes after a year is $100, how much are you willing to buy it now?
If the market interest rate is 3%, or the annualized return of the money fund is about 3%, then the most I am willing to pay is $97, so as to ensure that there is no less than 3% yield after a year. In the same way, if the interest rate is 5%, then I'm willing to buy this bond at most $95.
We can also see from this example that the higher the interest rate, the lower the bond price. Over the past year, the Fed has continued to hike interest rates, and the bond market has entered a bear market. Today, the US rate hike is coming to an end, and a good day in the bond market may also come.
Bonds are less risky than equities, but yield potential may not be as good as stocks. On Futu app, investors can easily participate in bond investments.
Of course, investors should also pay attention to the choice of bonds. First of all, in a high interest rate environment, can not reposition high-risk bonds with poor credit. At the same time, in the term of the bond, since the Fed will not cut interest rates by half, you can choose bonds with maturity of more than one year.
Third, the forex and gold markets.As the US continues to raise interest rates, the US risk-free interest rates increased, and a large amount of US dollar funds returned to the US, pushing the dollar index to soar. Corresponding, non-US currencies, including the euro, pound, yen, etc., have continued to depreciate significantly. In addition, gold prices fell sharply as gold is denominated in US dollars and the dollar rose.
Today, the US rate hike ends, the rising trend of the US dollar index is abruptly ending, and non-US currencies such as the euro and yen may also usher in the opportunity of layout. At the same time, gold prices have already risen sharply under the expectation of the end of the rate hike, close to a new all-time high, and now the rate hike is about to officially end, and perhaps there is the possibility of continuing to break through.
In Futu APP, investors can participate in foreign exchange market trading, but also through the layout of gold stocks or gold ETFs to grasp the potential investment opportunities.
The above is the end of the Fed's interest rate hike environment, some of the assets and segments that may appear in the market. Investors can make asset allocation and investment layout according to their financial situation and risk preferences.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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