A series of positive economic data and the booming stock market recently announced have made the US economy soft landing. However, in the process, the Federal Reserve Commission (Federal Reserve) has fallen into a dilemma.

Of course, for the Federal Reserve, this is a question about trillions of dollars. With such a low unemployment rate, an increase in actual wages and consumer confidence, and a record level in the US stock market, can it maintain such a strong growth without re -ignition of inflation?

Another point of view is that if inflation is currently flat or lower than the Fed's goal, and the Fed believes that "neutral interest rates" (that is, the economy can fully operate, while maintaining a stable inflation rate interest rate) Federal fund interest rates are 5.25%to 5.5%, or the actual interest rate is more than 3 percentage points higher than the neutral interest rate, which may cause unnecessary damage to the economy.

The lagging of monetary policy actions and its effects is quite long, so the risk of long -term strict policies does exist, and it may even destroy the economy that may seem soft landing.

No matter whether the Fed will have three, five or six rate cuts, it will obviously depend on the Fed's view that the inflation rate has decreased too fast or too slowly.

Considering the digestion of the market -especially the stock market and the foreign exchange market, even a hint of the Fed's favored action plan may have a significant and direct impact on the prices of markets and large technology stocks. Large -scale technology stocks are particularly important for the role of the US stock market to achieve a record level.

The performance of the US economy -it overcome the rising actual interest rate, unfavorable global economic environment, uneasy geopolitical conflict and tension, and unsightly capable Congress. Thanks to the huge financial stimulus injected into the US economy in recent years.

In order to cope with the new crown epidemic, the US government provides a trillion -dollar stimulus and financial support for the family. US President Joe Bayeng also exempts billions of dollars of student debt, and through his infrastructure expenditure plan, Incentives and clean climate incentives for domestic semiconductor manufacturing industry have injected trillions of dollars into the economic system.

This will pay a long -term price in the form of a significant increase in US Treasury bonds, and U.S. Treasury bonds have soared before Biden took office. During Donald Trump's presidential term, the debt of the US federal government increased significantly, with a total of nearly $ 28 trillion. Now this number has just exceeded $ 34 trillion.

Of course, if the US economy continues to grow at the current speed and interest rates have indeed decreased significantly, the cost of repaying these debts will become less daunting. The Fed's ability to subtly achieve soft landing is essential for American families and enterprises, and it is also the key to government financing.

This is also political in the election year. Biden's support rate is largely due to consumers who are dissatisfied with the rising living costs of long -term high inflation, and have a negative view of economic conditions.

The declining inflation rate, signs of economic growth, and expected interest cutting expectations are reversing this situation, and making the Fed's decision -making may become a major political issue.

There is no doubt that the continuous interest rate cut before the US presidential election in November this year will be described by the Trump camp as the Federal Reserve's support for Biden, or if Trump won the presidential election, he will attack the Fed again and try (Just like what he did during his term of office), he transformed his committee into an institution that ordered himself.

The potential economic and political influence of the Fed's decision -making this year will increase the weight of decision -making, although Powell led by the Fed's imagination, almost affirmed, and will pay more attention to the economic situation.
 

Market Outlook:

1) U.S. stocks: US stocks have risen strongly since the beginning of the year, and the market's expectations for US stocks this year have continued to increase. Due to the decline in interest rate cuts, U.S. stocks may choose to choose in a short -term direction.
2) U.S. Treasuries: The trend of US debt yields has resurrected, and the space for 10 -year US bond interest rates to further rise is limited, and it may continue to fluctuate more than 4%.
3) Gold: The continuous rising inflation pressure affects the gold market. Gold may face further selling pressure in the short term, but in the long run, he still watched.