The current on the Fed rate hike is a hot spot is very prominent, mainly the U.S. Treasury Secretary Yellen speech that the Fed rate hike is beneficial to society and the Fed, and thus the market expectation reversal and debate. Especially at present in the United States is always in between the temporary argument of inflation, the Fed to raise interest rates or not to become the focus, which is consistent with the author’s judgment ideas, but the time may have advanced. One important reason is the element of inflation indicators, coupled with the positive effect of the corresponding U.S. structural configuration, the Fed is bound to raise interest rates.
The first is the reality of inflation has come. The U.S. previously released April inflation data of 4.2%, which has exceeded the Fed’s monetary policy parameters standards, interest rate hikes in line with policy purposes. And the upcoming release of May inflation is expected to be 4.7%, although whether this is the case is uncertain, but through the U.S. real estate data to see the possibility of rising inflation in the United States, the latest U.S. home sales prices rose 23.6% year-on-year, home prices rose to a new high of more than 10 years on inflation is one of the factors stimulating the rise. Especially looking at international oil prices have jumped to $70, the future is expected until $80-90, U.S. inflation is an inevitable event and possible. The configuration of the U.S. inflation index is biased towards transportation and energy prices is its main structural feature, and it is more worth paying attention to the concerns of the Fed’s shift to the core PCE indicator so far at the end of last year, which has now also reached 3.6%. The synchronization of the two points to coincide with the Fed’s policy objectives is not a natural phenomenon, instead prepared, purposeful and targeted macroeconomic regulation is what we should focus on.
Secondly, the inflationary support is ready to correspond. Although some U.S. officials still maintain a temporary U.S. inflationary rhetoric, the fact of inflation is undeniable. And more attention is worthy of the U.S. policy planning and indicators of the complementary function of the equivalent, which is also sitting on the necessary cooperation and pavement of U.S. inflation, and even the focus of future inflation and high prices sustainable. Through the U.S. epidemic since the fiscal or monetary policy relief and stimulus programs, the market sees the reality is that the U.S. wage standards are increasing, the first thing President Biden administration is to raise the federal minimum wage to $15 per hour, which is part of the $1.9 trillion epidemic relief plan, its current $7.25 per hour as a priority, which is one of the U.S. initiatives to prepare in advance in the face of inflation . Coupled with data showing a large increase in the U.S. savings rate, which is not only beyond the historical cycle norm, but also deviates from the complexity of the special situation of the epidemic, in which social security, government bailouts and investment returns overlapped to promote the role of the three is the more important preparatory actions and background elements to support the U.S. response to inflation. And this round of U.S. bailout and stimulus program directly corresponds to the entity is the core, the display of corporate effect is both a social reality and the actual results of individuals. So far, the U.S. economy has recovered beyond the ordinary, the rate of economic growth shows the function of enterprises and support, and excellent corporate performance, the general growth of corporate statements since the epidemic is an undeniable merit to promote income, but also the U.S. face inflation has been solid industrial foundation and security.
Finally, the inflation implied interest rate strategy. The U.S. interest maximization as well as risk maximization is concentrated in the dollar, and the dollar effect is both a life-saving and a crisis risk. Therefore, before and after the epidemic, the dollar has been pursuing depreciation strategies and principles, even though the U.S. economy recovered ahead and superior, but the dollar depreciation has never stopped, so far the ratio of the dollar to the starting exchange rate of the epidemic depreciated 12%, basically the same level as the beginning of the year, but the range bias depreciation and a longer time, which not only deviates from the U.S. economic reality and facts, but also the formation of a protective barrier to the economy and the significance of maintaining confidence has been clearly visible. However, the strategic layout of the U.S. economy to suppress competitors is very effective, shipping, commodity prices doubled, the U.S. economy is at ease to cope with the cost is not large gains, the economic barometer of the stock index has responded to the U.S. benefit and earnings of comparative advantage and level capacity. The U.S. dollar exchange rate has been at the mercy of the United States, leading and leading a very powerful and appropriate momentum. In contrast, the dollar interest rate is the weakness of the dollar exchange rate shortcomings and deficiencies, interest rates and exchange rate configuration misalignment and is not conducive to the dollar to fully promote and grasp the strategic competition, and thus the current U.S. monetary policy focus is on interest rates, Treasury yields, bank discount rates, etc. have been preceded by the Federal Reserve benchmark interest rates. Especially among international comparisons, the reversal of the zero dollar interest rate is a strategic process and stage choice for the dollar interest rate to gradually occupy the leading and dominant position in global interest rates to resume. If the market perspective elevates the dollar interest rate to the strategic height of the dollar, the Fed rate hike is logical and far-sighted, the dollar interest rate hegemony dominant awareness, strategy and timing will not be difficult to understand.
It is expected that next week’s Fed rate hike is unlikely, data confirmation and observation perspective will make the Fed more prudent. Especially at present, the United States and global economic fluctuations there is a decline in volatility, volatility direction is not clear, the future or the Fed to choose an important level of reference timing. In addition, the summer itself off-season characteristics and the special situation of the epidemic, the Federal Reserve will be more cautious choice. At the same time, the market is considering the pace of the Fed’s rate hike is not the norm 25 points corresponding, or only 10-15 points hike test and change will be the focus of market attention, before the Fed has been revealed. Especially the exaggerated sentiment of the market in considering the issue of Fed rate hikes is worth being wary of, even if there is a possibility of Fed rate hikes, the U.S. dollar benchmark interest rate zero start, coupled with the epidemic and economic uncertainty complex situation, the Fed rate hikes or not aggressive, just gradual, feel out, test and for, which is crucial. Inflation and interest rate tightness is a theoretical logic and reality, but the special characteristics of the dollar is more unprecedented rare times, assessment and expectations more high-end need to improve and follow up the argument. In addition, it is expected that under the interest rate policy uncertainty, the dollar exchange rate adjustment direction is the key, and even will produce the possibility of global comprehensive adjustment, the dollar phase rebound is probable, but the magnitude is still very restrained.