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[peterlau]

When do you think USA will start to lower the interest rate?

[Kenwong1213]

Hi Peter,
When US treasury rate starts its downward trend we should see fund flowing out of Wall street ( don’t know exactly how and when). I suppose money will begin to chase after more risky investment in the emerging market for higher return.
What I am more concern about when US start dropping interest rate is the tail-risk of YEN carry trade unwinding.
Any comment from our experts ?

[peterlau]

I heard that many people bought the Japan properties because YEN is cheap now.

[garyyeung]

Hi all,

Given the strong US job market, the Fed is very likely to keep their words to cut rates this year. In its March forecast, the Fed’s median projection is for 75bps cuts in 2024, followed by another 75bps in 2025. June this year may be the earliest opportunity for the Fed to start cutting rate. For UK and Europe, the inflation is stickier as they are more prone to the energy shortage with their current economy structure.

Agree with Ken that unwinding of USDJPY carry trade is concerning, leveraged money market funds are heavily involved in it. I would say those managers must have already looked into other currencies such as GBP/EUR as an alternative of USD.

Gary

[Kenwong1213]

It is interesting to see how the Fed keep giving out mixed signals on rate. So,we know that the Fed cannot afford to a honest broker for if it did, every investors would be heading towards the same direction and it will be difficult institutions to open the CALL and PUT options.

[Kenwong1213]

By the way, can anyone tells me the difference between Sticky inflation and Stagflation ?

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