CICC: The less expected the Federal Reserve to cut interest rates, the more likely it is to prompt a rate cut

On May 21, the China Gold Research Report pointed out that since the beginning of this year, asset trends have switched frequently, and the main line behind it is precisely the economic fundamentals and policy expectations driven by tight financial conditions. With the easing of US financial conditions since May, we suggest that the follow-up economic data may strengthen again. If it strengthens too much, it may even affect the interest rate cut window in the third quarter, similar to the "replica" at the beginning of the year, thus limiting the market and asset risk appetite in this position. Space and sustainability. In other words, the more you don't expect interest rate cuts, the more likely it is to lead to interest rate cuts; the more you expect interest rate cuts, the more you will only delay interest rate cuts. Therefore, even if we continue to engage in interest rate cuts in the current environment, we must also pay attention to the persistence of the rebound and the reflexivity of the loosening of financial conditions. For the Fed, it may learn the lesson of turning too quickly at the end of last year, which led to higher inflation at the beginning of the year, maintain the current tight stance, and wait for more data to materialize (for example, inflation will continue to fall next month) before letting go.