TechFlow news, according to SoSoValue's macro sector data, on December 18, the Federal Reserve cut interest rates by 25 basis points as expected during its FOMC meeting, lowering the target range for the federal funds rate to 4.25%-4.50%. Regarding the pace of rate cuts next year, the Fed adjusted its outlook in the latest dot plot from an initial expectation of "four cuts" to now expecting only "two." Additionally, the Fed raised its forecasts for core PCE inflation and GDP growth, aligning with Chairman Powell’s comments, collectively sending a more hawkish signal than market expectations. Market data shows that the VIX index, a gauge of risk sentiment, surged to its highest level since early August (when the Bank of Japan hiked rates).
SoSoValue analysts noted that the FOMC's unexpectedly hawkish rate-cut projections, coupled with Powell's hawkish remarks, triggered a shift toward market panic—Treasuries reacted sharply, and U.S. equities pulled back, while the dollar strengthened significantly. Overall, all risk assets have strongly reacted to the FOMC's latest signals. Based on macroeconomic data, we believe the underlying strength of the U.S. economy remains intact and the dollar continues to be strong. Assets with strong consensus, such as cryptocurrencies, remain destinations for capital inflows. Every market-driven pullback presents a favorable entry opportunity. We recommend maintaining current risk exposure at this time.
