【I was stunned by the Federal Reserve's actions! Interest rates are still sky high, yet they are secretly "injecting liquidity"⁉️】
Do any family members understand? This round of operations by the Federal Reserve has truly left me perplexed!
On one hand, the 10-year U.S. Treasury yield has soared to 4.14%, and the borrowing costs for businesses, the American government, and us ordinary people remain extremely high—money is still painfully expensive😓. On the other hand? The big shot at PIMCO, Kelly, directly retorted: "I don't understand why the Federal Reserve is so aggressive about expanding the balance sheet (printing money) but is so stingy about lowering interest rates? If it were me, I would definitely do the opposite!"
Is this contradictory? Absolutely! But if you think about it, perhaps this is the Federal Reserve's clever (or rather, conflicted) aspect:
1️⃣ Saying one thing but meaning another:
Inflation data hasn't completely stabilized, so they dare not openly lower interest rates to stimulate the market for fear of backlash. But they are also afraid that liquidity will truly dry up, leading to a "money drought" collapse, so they secretly expand the balance sheet, giving the financial system "IV drips" to keep it alive.
2️⃣ The market's real reaction:
Long-term interest rates aren't coming down, indicating that smart money doesn't believe in the fairy tale of "immediately unleashing a flood of liquidity." They are voting with their feet: a high-interest rate environment might last longer than we expect (Higher for longer?).
3️⃣ What impact does this have on us:
Don't expect to immediately return to the zero interest rate era of borrowing crazily. The high cost of capital will continue to squeeze the valuations of various assets. But! Liquidity is quietly increasing... where will this "water" ultimately flow to?🧐
So, this situation is neither a pure bear market abyss nor a full-blown bull market charge. It resembles a "stress test": between tight credit costs and potential easing expectations, the market is searching for balance again.
What do you think? Is the Federal Reserve playing a big game, or are they truly in a dilemma? Let's discuss in the comments! 👇
