There is No Need to be Too Pessimistic about the US Economy in the Short Term (II)

The US stock market’s trend in 2019 also faces strong uncertainty. From a bearish point of view, the downward trend in economic growth and the improvement in corporate earnings on the fiscal deficit have basically ended, spiral steel pipe supplier which will aggravate the downward pressure on the US stock market. However, from the perspective of Lido, the suspension of the Fed’s monetary policy tightening and the decline in the valuation of the US stock market in 2018 may lead to the stabilization or even rise of the US stock market. However, as market participants generally expect positive progress in Sino-US trade negotiations, once the results of Sino-US trade negotiations are less than expected, this may lead to major adjustments in US stock markets and global stock markets.

First of all, although the world’s major economies have shown a pattern of collective growth in growth in 2019, they do not have to be too pessimistic about global growth in 2019. The US economic growth rate is expected to fall from 2.9% in 2018 to 2.2-2.3% in 2019. The economic growth rate in the euro zone is expected to fall from 1.9% in 2018 to 1.1-1.2% in 2019, but it is still not a recession. At present, the high-frequency indicators of the US economy show a relatively uncertain trend. The probability of a soft landing of the US economy is significantly higher than the probability of a hard landing. Secondly, the recent 10-year US Treasury yield has fallen below 2.4%, and the probability of further sharp decline is very low. After all, after nine interest rate hikes, the US federal funds rate has risen to 2.25-2.5%. Under the premise that the US economic growth rate is still higher than the potential growth rate, the inflation rate is still around 2%, the labor market is still tight, steel strip supplier and the Fed will not cut interest rates in the short term, the 10-year government bond yield is difficult to maintain the same as the overnight lending rate. Even lower than the latter. In the near future, the US 10-year bond yield has the possibility of bottoming out.

Although the end of the Fed rate hike cycle may lead to downward pressure on the US dollar index, considering that the euro zone’s economic slowdown is no less than that of the US, global financial market volatility may continue to rise, and the global economic growth rate will decline in 2019. The factors mean that the performance of the US dollar index will not be too bad. Considering the following two aspects, the exchange rate of the US dollar against the RMB in 2019 is expected to show a two-way wave dynamic potential around 6.6.

Whether it is the downturn in economic growth,Tin Plated Steel Sheet the decline in corporate earnings growth, the rise of domestic political uncertainty, and the intensification of global financial market turmoil, it may cause a new round of turmoil in US stocks. With the approaching of the new round of US elections in 2020, the negative impact of domestic political uncertainty on the stock market may gradually become prominent.

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