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Engine vision | cut interest rates, plunge, risk aversion, re-buy
It cut interest rates for the first time in a decade
Just before 2 p.m. Edt on July 31, 2019, the normally noisy floor of the New York stock exchange suddenly fell silent, with some traders cranking up their usual commercial TV channels to await the fed's July interest rate decision.
At 2 p.m., the federal reserve announced that it would cut its benchmark interest rate by 25 basis points to 2-2.25%, the first time in nearly 11 years. The fed also announced a two-month moratorium on shrinking its balance sheet. The fed said that while the outlook for the us economy was good, global growth was weak and trade was uncertain, and that it was taking modest action to keep the economy expanding "for insurance and risk management reasons".
In the United States, the dow Jones industrial average immediately fell, its biggest loss of the day more than 400 points. But then, in response to another question, Powell said, "it doesn't mean the fed will cut rates just once."
Historically, the fed has entered into the path of interest rate cuts, mainly in response to economic recession or financial crisis, and the current macroeconomic data do not give the fed sufficient reasons for successive rate cuts. Unable to find the direction of the situation, the three major stock market shocks closed lower, down more than 1 percent.
US President Donald trump said on Sunday that the us will impose tariffs of 10 percent on us $300 billion worth of goods imported from China starting from September 1 this year.
However, Mr Trump said he would continue to have constructive talks with China on a comprehensive trade deal and that the future of the two countries would be very bright. Affected by trump's latest statement, the market risk assets experienced a "moment of panic", risk aversion suddenly increased.
Three major U.S. stock indexes plunged
The dow Jones industrial average fell more than 300 points in early afternoon trading as Wall Street took a swift dive following trump's latest comments.
Among them, from the dow Jones index intraday rise more than 300 to fall more than 300, at one point plunged 600 points.
All three major U.S. stock indexes ended the day lower, with the dow down nearly 300 points, or 1.05 percent, the nasdaq down 0.79 percent and the s&p 500 down 0.90 percent.
The A50 plummeted by nearly 3%
In addition to the sharp drop in U.S. stocks, A50 futures also plummeted, dropping as much as 2.98 percent.
Crude oil plunged more than 7 per cent
Nymex west Texas intermediate for September delivery tumbled $4.63, or 7.9 percent, to close at $53.95 a barrel, its lowest close in six weeks. It was the biggest one-day drop in WTI futures in four years.
London brent crude, the international benchmark, fell more than 6 per cent to close at $60.67 a barrel, its biggest one-day fall since February 2016.
Only gold and bitcoin rose strongly as risky assets tumbled
Both bitcoin and gold are essentially improving issues such as seizure protection and inflation predictability, and there is convergence in trends, but the logical thinking process of human investment is structured like this: we try to look for patterns in the past and infer patterns in the future.
That's why we trust people we've known for a long time, and that's why we often buy the same brands over and over again. While this may be considered a flawed approach in some cases, we apply the same idea to value storage.
Whether the properties of bitcoin and gold are consistent or not is not the point of this article. It is just a game of thinking.
Engine research institute evaluation
"The offshore renminbi plummeted against the dollar, dropping from around 6.89 to around 6.96 in an hour, dropping more than 600 points, the biggest drop since May 13."
With trump's strong executive power, a new round of quantitative easing for the dollar is definitely on the way.
Dealing with the us administration's debt, deficit and infrastructure problems with easy dollar monetary policy was once the secret of the Chinese model, but it is now possible to apply it to the us.
The complexity of the international situation will shift to assets with stable politics, relatively strong currencies and stable cash flows, as a hedge against a loose dollar and a weak dollar.
From the perspective of strong currencies, the huge changes in the value of international transactions of bitcoin and some cryptocurrencies have led to their departure from the regular payment business, which has attracted attention from all sides. The industry has also started to advocate stable currency, which must be accompanied by sound quantitative monitoring, custody rules and correct incentive mechanism.
This is a very deliberate and strategic interest rate cut. In a large economic system, the balance of effective institutional supply has evolved, not been designed.
The reality is often to push the envelope and pay again and again.