dovish

The market is closely watching Federal Reserve Chairman Kevin Walsh's speech at the Jackson Hole annual meeting this Friday. As U.S. long-term Treasury yields continue to rise, the market generally expects Walsh to possibly release dovish signals to alleviate concerns about inflation and fiscal risks in the bond market.Mark Cabana, head of U.S. interest rate strategy at Bank of America, stated that the market has gradually lost sensitivity to Walsh's previous verbal statements about "fighting inflation," and investors currently hope to see a substantive policy path to address inflation. Meanwhile, Treasury Secretary Basant has recently increased the repurchase of long-term U.S. Treasuries and financed the government through the issuance of short-term bonds, indicating some divergence between the Treasury and the Federal Reserve in managing the bond market.The article points out that Basant's shift of financing pressure to the short end effectively bets U.S. fiscal costs on future interest rate declines. If Walsh can promote interest rate cuts by controlling inflation and boosting productivity, the short-term financing model is expected to reduce government interest expenses; however, if long-term rates remain high, U.S. fiscal pressure may further intensify.The market also anticipates that the Federal Reserve may make adjustments to liquidity management and balance sheet policies. Michael Cloherty, head of U.S. interest rate strategy at CIBC, believes that quantitative tightening could begin as early as the end of 2027, provided that regulatory rule changes can reduce banks' demand for reserves.Currently, the Federal Reserve still holds about $1.6 trillion in long-term U.S. Treasuries. Walsh's statements at Jackson Hole regarding long-term yields, inflation, and the path of balance sheet reduction may become an important signal for assessing the degree of future policy coordination between the Federal Reserve and the Treasury.

According to CoinDesk, analysts say that if the Federal Reserve releases any dovish signals, it could be beneficial for Bitcoin. There is significant divergence in the market regarding whether the Federal Reserve will raise interest rates on Wednesday—CME FedWatch data shows a 70% probability of maintaining rates and a 30% probability of an unexpected 25 basis point hike. Block Scholes analyst Thahbib Rahman pointed out that the reduction in forward guidance usage by Federal Reserve Chairman Kevin Warsh has led to increased market uncertainty, making this FOMC meeting one of the most uncertain in years.Bitcoin has risen about 6% so far in July, while the S&P 500 has remained flat, and the semiconductor sector has dropped nearly 20%. K33 Research's research director Vetle Lunde stated that the Nasdaq had previously been strong and positions were stretched, with Bitcoin continuing to consolidate near multi-year lows, leading to a weakening correlation between the two. This week's FOMC meeting may have limited impact on BTC. Rahman stated, "Any dovish signals could drive Bitcoin to continue outperforming."

According to Jinshi reports, a research report from CITIC Securities points out that the current pace of the Federal Reserve's leadership transition is steady. In the next two years, among the seven members of the Federal Reserve Board, only Jerome Powell may see changes due to the end of his term in 2028.New Chairman Waller was sworn in on May 22 and did not release any dovish signals. Overall, the dovish forces within the Federal Reserve have significantly weakened, with a neutral and slightly hawkish policy stance prevailing, but attention still needs to be paid to factors such as the U.S. economic situation and geopolitical conflict risks.

According to Jinshi reports, the Federal Reserve's meeting minutes will be released tonight, and internal rifts may be fully exposed. Federal Reserve officials stated that persistent inflation is the most pressing risk facing the economy, and in certain cases, it may be necessary to raise interest rates to alleviate inflationary pressures. Market views suggest that it will become more difficult for the Federal Reserve to push for rate cuts after the new chairman, Waller, takes office, and the meeting minutes will help gauge the changes in the size of the camp advocating for a more neutral forward guidance.

The Governor of the Bank of Japan, Kazuo Ueda, has signaled a dovish stance, indicating a more cautious approach amid the uncertain impact of the Iran war on the Japanese economy, which has provided support for Bitcoin to break through $74,000.In recent years, the Bank of Japan's interest rate hikes have repeatedly caused turbulence in the crypto market. On August 5, 2024, an unexpected rate hike by the Bank of Japan triggered the unwinding of yen arbitrage trades, causing Bitcoin to drop from $64,000 to $49,000 within 48 hours. On the 28th of this month, the Bank of Japan will hold a monetary policy meeting.

According to Jinshi reports, Ameriprise Financial Chief Market Strategist Anthony Saglimbene stated that the Federal Reserve's policy statement and interest rate decision were in line with expectations, and the economic outlook summary and statement were slightly dovish. He pointed out that although PCE and core PCE expectations have risen, the statement still emphasizes that the economic conditions are good, with moderate job growth and a stable unemployment rate.

According to Jinshi reports, Pimco global economic advisor and former Federal Reserve Vice Chairman Clarida stated that the result of this Federal Reserve interest rate decision is "constructively dovish." He added that artificial intelligence supports economic demand, and to some extent, it, along with the BBB (Big Beautiful Bill) tax cuts, may offset the drag caused by rising oil prices.

According to Jinshi News, the U.S. financial website investinglive stated that the core PCE has recorded a month-on-month increase of 0.4% for two consecutive months, which is a concern for the doves within the Federal Reserve. If similar data appears for a few more months, the inflation rate will quickly approach 2%. In addition, these data will still be included in the year-on-year calculation over the next 10 months, and the impact of energy prices is also about to arrive.

According to Jinshi, Federal Reserve Governor Mester stated that if there is any impact, it would only lead me to lean towards a more dovish policy.

According to Jinshi News, FXEM analyst Abdelaziz Albogdady stated that although the dollar has stabilized after falling to multi-year lows, it still faces downside risks. The weakness of the dollar is mainly due to Trump's comments signaling tolerance for currency depreciation, raising concerns that Trump may nominate a more dovish Federal Reserve chairman, which would imply looser monetary policy and decreased institutional independence. Coupled with widespread unease over domestic political risks in the United States, the dollar remains under pressure. Any dovish tendencies could exacerbate the downward pressure on the dollar and U.S. Treasury yields.

According to CoinDesk, the market widely expects the Federal Reserve to maintain interest rates this Wednesday.The key focus of this meeting is the statement from Fed Chairman Powell during the post-meeting press conference, as his remarks may provide directional guidance for risk assets, including Bitcoin. The core concern for the market is whether this pause in rate cuts will be interpreted as a "hawkish pause" or a "dovish pause." If Powell emphasizes inflation risks, it could dampen rate cut expectations and put pressure on risk assets; conversely, if he suggests that the pause in rate cuts is temporary and opens the door for resuming cuts in the coming months, it could boost risk assets like Bitcoin.Additionally, if officials appointed by Trump cast dissenting votes on the decision to maintain interest rates, it could strengthen market expectations for future easing policies. Powell's explanation for the decision to maintain rates may provide support for the dollar, thereby putting pressure on Bitcoin priced in dollars. He may also be asked about the Trump administration's recent housing affordability measures (which could raise short-term inflation), the judicial investigations targeting him personally, and the bond market volatility triggered by Japan, as these statements could exacerbate market fluctuations.

According to Jinshi, the Federal Reserve has released the minutes of its last interest rate decision meeting of the year, confirming that FOMC members are willing to consider further rate cuts. The minutes show that the Fed's stance is leaning towards dovish, with most rate setters willing to explore the possibility of further rate cuts, but any policy adjustments will still depend on weak inflation data.

Fundstrat co-founder and BitMine chairman Tom Lee recently stated in an interview with CNBC that the Federal Reserve may adopt a more dovish monetary policy in 2026, which is expected to boost business confidence and drive the ISM Purchasing Managers' Index back above 50, benefiting traditional industries such as industrials, energy, and basic materials. Lee believes that the financial services industry will see a reduction in employee density and an increase in profit margins due to AI and blockchain applications, predicting that leading banks like JPMorgan and Goldman Sachs may behave more like tech stocks, with the potential to become the next batch of "tech giants." Although the market may experience significant volatility in 2026, Lee pointed out that historical data shows that after three consecutive years of over 20% gains, there is a 50% chance of better performance in the fourth year. He warned that the main risk lies in excessive complacency, but the current cautious attitude of investors may help mitigate this issue.

According to Jin Ten, analyst Anstey stated that U.S. Treasury yields have rebounded from earlier lows, and the gains in stock index futures have also been quite limited since the CPI data was released. Investors are considering that there is still a long way to go before the Federal Reserve's interest rate decision on January 28. U.S. interest rate strategist Ira Jersey mentioned that low levels of CPI year-on-year data will make it easier for the doves within the Federal Reserve to argue that further rate cuts should be implemented if the economic data in December is weak.

According to CoinDesk, during the early trading session on Wednesday in the U.S., cryptocurrency prices surged significantly, with Bitcoin prices returning to above $90,000. Factors that may be favorable for the market include:Metal prices continue to rise sharply, with silver up about 5%, reaching a new high of over $66 per ounce, while gold and copper prices have also increased by more than 1%.A leading candidate for the Federal Reserve chair, current Fed Governor Chris Waller, made dovish remarks in a public speech, suggesting that the neutral federal funds rate should be 50-100 basis points lower than the current level.He also added that the current job growth in the U.S. is close to zero, and inflation is not expected to rebound. Currently, the major U.S. stock indices are relatively unchanged in early trading, and the yield on the 10-year U.S. Treasury bond has decreased by 2 basis points to 4.15%.

According to Jinshi reports, as Federal Reserve Governor Waller made dovish remarks, the decline in U.S. Treasury bonds has narrowed.

According to Jinshi Data, Investinglive analyst Giuseppe Dellamotta stated that recently, Federal Reserve Chairman Powell made more dovish comments than expected at the FOMC press conference, providing support for gold prices. He downplayed inflation risks and emphasized the weakness in the labor market, suggesting that the Fed's tolerance for higher inflation is greater than its tolerance for a weak labor market.This week's focus is on the U.S. non-farm payroll report and the Consumer Price Index (CPI) report. Currently, the market expects the Fed to cut rates by 57 basis points by the end of 2026. If U.S. economic data is strong, particularly in the labor market, we may see a hawkish adjustment in market rate expectations, leading to a decline in gold prices.On the other hand, weak data should further support precious metal prices, as the market will bet on rate cuts in advance. From a more macro perspective, due to the Fed's dovish reaction mechanism, real yields may continue to decline, so gold prices should maintain an upward trend. However, in the short term, further hawkish adjustments in rate expectations may put pressure on the market.

According to Jin Ten, after Federal Reserve Chairman Powell expressed concerns about the labor market yesterday, Wall Street is increasingly betting that the Fed will cut interest rates two times or more in 2026.Scott Helfstein of Global X stated that a dovish Federal Reserve should overall benefit risk assets, especially growth stocks and cyclical stocks. He pointed out that as borrowing rates decline, industries related to the corporate investment cycle may also be in a favorable position.

According to Jin Ten, Peter Cardillo, chief market economist at Spartan Capital Securities, stated that the 25 basis point rate cut aligns with market expectations, as the rate cut has long been anticipated, and the economic forecast remains optimistic. He believes this statement reflects a dovish yet cautious stance, noting that the Federal Reserve is maintaining a cautious approach and is still waiting for more economic data to emerge, especially observing the evolution of the labor market, while inflation levels remain high.

According to Jinshi reports, the dollar remained steady ahead of the Federal Reserve's policy statement and Chairman Powell's speech. The market expects a nearly 90% probability of a 25 basis point rate cut by the Federal Reserve on Wednesday, and anticipates two more rate cuts next year. Tickmill's Joseph Dahrieh stated that if Powell signals any inclination towards a more dovish policy path, it could put downward pressure on the dollar and long-term yields.