Wall Street's Fear Gauge Falls as Hopes for Trade Negotiations Rise
Unlocking Trends | Trump's Tariffs Shake Global Markets: How Aussies Can Navigate with ETFs?
The dilemma faced by Powell is the same as the market: "Schrödinger's Trump."
Should the economy be stimulated through interest rate cuts, or should high interest rates be maintained to curb potential inflation risks? Analysis suggests that under the uncertainty of tariff policies, the Federal Reserve cannot predict what Trump will do, much like the dilemma faced by the market: if he maintains tariffs as stated, the economy could rapidly shrink, and the S&P 500 Index may fall into a bear market; however, if tariffs are lifted, the economy may experience renewed growth, and the stock market could return to historic highs.
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As Gold falls below 3000, Wall Street continuously issues reports: tariffs support, and gold prices will rise again!
Wall Street believes that the current risk of a Global trade war and geopolitical uncertainty will provide strong support for Gold prices. Goldman Sachs maintains its expectation that Gold prices will exceed 3,300 dollars by the end of the year, while Deutsche Bank expects Gold prices to reach 3,350 dollars per ounce by year-end. HSBC has raised the Target Price for Gold, predicting that central bank purchases of Gold and Inflows into safe-haven ETFs will be the core driving forces pushing Gold prices higher.
The expectation for interest rate cuts is heating up! The market bets that the Federal Reserve will cut interest rates five times this year, with even the possibility of an emergency rate cut as early as next week.
Despite the potential inflation pressures from tariff policies, the market has fully priced in the expectation of five interest rate cuts by the Federal Reserve this year, with the yield on two-year U.S. Treasuries dropping to its lowest level since September 2022. JPMorgan expects that from now until January 2026, the Federal Reserve will decide to cut rates at every FOMC monetary policy meeting and anticipates that by early next year, the upper end of the target Range for the federal funds rate will decrease to 3.0%.
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