Recently, Federal Reserve officials approved a 25 basis point interest rate hike to a 16 year high, marking the tenth rate hike by the central bank in over a year, with a cumulative increase of 500 basis points. Federal Reserve Governor Michelle, who has long held voting rights at the FOMC meeting of the Federal Reserve Monetary Policy Committee during her tenure

Bowman admitted during the meeting in Germany that interest rates are currently in a restrictive setting for the economy, but she is not confident that the Federal Reserve has made enough progress in cooling the economy and inflation. Loan interest rates soared, banks failed one after another, many industries were laid off, and the world market fell. The Federal Reserve continued to raise interest rates aggressively, which not only increased the risk of domestic economic recession, but also affected the negative Spillover effect around the world.

01 | The possibility of further interest rate increase was not ruled out. On specific data, the initial value of the University of Michigan consumer confidence index in May was 57.7, the lowest since November last year, which was significantly lower than the expected 63, and the previous value was 63.5. In terms of sub indices, the initial value of the current condition index is 64.5, the expected value is 67.5, and the previous value is 68.2; The expected index had an initial value of 53.4, reaching a new low in 10 months, with an expected value of 60.8 and a previous value of 60.5. In terms of inflation expectations, which have received much attention from the market, the initial one-year inflation expectation is 4.5%, with an expected 4.4% and a previous 4.6%. The short-term inflation expectation has slightly decreased compared to April, but is much higher than the 3.6% level in March. The initial inflation expectation for 5 years is 3.2%, the expectation is 2.9%, and the previous value is 3%. CNBC also pointed out that the US gross domestic product (GDP) grew at an annual rate of 1.1% in the first quarter, lower than the 2% previously predicted by economists. After the latest monetary policy meeting, Federal Reserve Chairman Powell did not rule out the possibility of further interest rate hikes. After continuously raising interest rates, the Federal Reserve is currently facing a dilemma. On the one hand, Powell stated that although the current inflation level in the United States has eased, inflationary pressure remains high and there is "a long way to go" towards the long-term target of 2%. Several officials have told CNBC that even if interest rate hikes are suspended, interest rates may still need to remain high. On the other hand, the impact of continuous interest rate hikes and high interest rates on the economy is gradually becoming apparent. Fortune magazine in the United States pointed out that the Federal Reserve's interest rate hike will exacerbate the debt burden on consumers and businesses. Since the start of interest rate hikes in March 2022, interest rates on credit cards, mortgages, and car loans have been soaring, exacerbating the risk of economic recession. For most of the past year, investors have doubted whether the Federal Reserve can achieve a so-called "soft landing" - guiding inflation to decline without triggering a recession. It has been a year since the Federal Reserve began raising interest rates, but the future trend is still uncertain.

02 | Is buying US bonds, investment grade bonds, large technology stocks, and gold the best hedging strategy? Market research firm Seven

Tom, Founder of Report Research

Essaye stated in a recent report that buying long-term US bonds and gold would be the best safe haven strategy, while the outlook for US stocks is not optimistic. According to Hartnett, inflation is the only support for the Federal Reserve to continue raising interest rates. He believes that the Fed is unlikely to pause rate hikes when inflation drops to 5%, and unemployment is still at its lowest level in half a century. Perhaps the risk facing the market in June is not debt ceiling, but another employment and inflation data that supports rate hikes. Hartnett compared the current market performance with the 2008 financial crisis, reminding investors not to be too optimistic: in the two months after Bear Stearns fell into crisis in March 2008, the S&P 500 index rose 11% and the Nasdaq index rose 15%. Currently, within two months of SVB Bank's bankruptcy announcement, the Standard&Poor's index has risen by 7% and the Nasdaq index has risen by 10%. At that time, credit stocks and technology stocks led the rise for 10 weeks, but it reversed in the third quarter, and now it is the same. The difference is that defensive stocks outperform cyclical stocks, because real estate investment trusts, banks, energy, and small stocks are now releasing the signal of a "hard landing" of the U.S. economy.

The expected increase in interest rates by the Federal Reserve, as suggested by Jingtai Investment, has triggered market volatility. For investors, this is a moment that requires careful response. Why are there such fluctuations? Firstly, this is because raising interest rates means raising interest rates. This will increase borrowing costs and have a significant negative impact on industries such as finance and real estate. Meanwhile, due to the fact that interest rate hikes often lead to a decline in asset prices such as stocks and bonds, some investors may be concerned. After identifying these risks, we can consider the following aspects to deal with: strengthen risk control: when market volatility intensifies, we need to strengthen risk control and reduce the risk exposure of the portfolio. It is recommended to adopt diversified investment and reduce the overall risk level of the investment portfolio through the allocation of different assets. Accurately grasp market trends: Although interest rate hikes may trigger market fluctuations, this does not mean that all assets will be equally affected. It is necessary to closely monitor the changing trends of various assets in order to make timely adjustments.