Shen Wanyuan: The Fed's doves stimulate the market, and the bull market is expected to continue until the end of the year

沈万源

特邀专栏作者

2021-03-19 09:07

This article is about 1786 words, reading the full article takes about 3 minutes

The Fed's dovishness stimulates the market, and the bull market is expected to continue until the end of the year.

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The Fed's dovishness stimulates the market, and the bull market is expected to continue until the end of the year.

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It is worth noting that despite the sharp rise in U.S. debt in recent days, against the background of rising inflation risks, Jensen believes that the ability to use bonds for diversified investment has deteriorated significantly, and the ability to use bonds to obtain returns has obviously declined. And pro-worker employment policies and slowing globalization mean that technological progress is the only force holding back inflation. And fiscal and monetary policy makers may provide more financial support until the limit is reached.

On March 18, Jerome Powell, chairman of the Federal Reserve Board (hereinafter referred to as: the Federal Reserve), said at a press conference that the Federal Reserve is expected to maintain loose monetary policy to promote economic development affected by the coronavirus. And emphasized that interest rates will remain near zero until at least 2023.

Affected by the US government's US$1.9 trillion stimulus plan, the market expects hyperinflation in the global economy, which may force the Federal Reserve to raise interest rates in advance. It is worth noting that the current market expectations for inflation have soared to the highest level in 12 years. The Federal Reserve also expects the inflation rate to exceed 2% in 2021. Interest rates will be raised, and this press conference will also inject a dose of stabilizer for the market.

A dovish monetary policy stance creates favorable conditions for Bitcoin price to rise. Alan, the chief researcher of the Binance China Blockchain Research Institute, told the researcher of the China Times Financial Research Institute that if the interest rate hike comes earlier, a large amount of funds from traditional institutions and retail investors may divert part of the funds back to the bank to buy more stable fixed-term financial management There will be a certain degree of outflow of funds in the cryptocurrency market such as bitcoin and other products. On the contrary, the news that interest rates will not be raised within two years has created a good environment for the inflow of funds in the cryptocurrency market. Switching to Bitcoin and other assets due to depreciating fiat currency will bring benefits to the investment market in the past year.

Bitcoin's anti-inflation properties are amplified

Although the Federal Reserve stated that it does not expect to raise interest rates in the next two years, Greg Jensen, co-chief investment officer of Bridgewater, the world's largest hedge fund, recently signaled to the market that the global economy may usher in a round of hyperinflation. A Biden administration's fiscal stimulus would boost consumer prices while threatening the post-crisis rally in bonds and stocks. Markets are not overreacting to inflation, and economic conditions and inflation will actually change faster than markets or the Fed expect.

Jiang Jinze, head of research and strategy at Onchain, wanted to be a researcher at the China Times Financial Research Institute, saying that the Federal Reserve raised its short-to-medium-term economic outlook in the early morning meeting on the 18th, and maintained a dovish monetary policy caliber, trying to appease the market, which once again stimulated the market's animal Spirit. If purchases of government bonds are reduced, yields could quickly spiral out of control as the largest long-term buyers leave the market, so according to speculation from various Fed officials, investors need not worry much about the Fed's easing policy exit, at least until the fall. Support for markets is sure to send shockwaves through the economy and financial markets.

Today, the price of Bitcoin has stabilized above $58,000. Bitcoin is currently recognized as a tool for hedging against inflation. The dovish monetary policy stance is expected to promote the rapid rise of Bitcoin prices again. Mizuho Securities survey estimates that nearly $40 billion of the $1.9 trillion U.S. stimulus package will flow into bitcoin and bond markets.

In this regard, Alan emphasized that the US government has recently signed the hotly debated $1.9 trillion rescue bill, which also includes a $1,400 distribution plan for citizens. The U.S. government's continuous monetary easing "water release" policy has caused most retail investors to abandon holding depreciating fiat currencies and switch to assets such as Bitcoin, so it will bring benefits to the investment market in the past year. If there is a continuous flow of funds into Bitcoin, it will maintain and prolong the bull market of this round of the market and bring more user traffic; it will undoubtedly be beneficial to the price of Bitcoin.

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