What is the Probability that the Fed will “Change its Face” in September

The US GDP growth rate in the second quarter was 12.17%, a record high in nearly 70 years; the July CPI announced on August 11 was 5.4% year-on-year, which was the same as the previous month. These data show that the US economy is still overheating.

The unemployment rate for July announced on August 6 was 5.4%, a decrease of 0.5 percentage points from the previous month, and the rate of decline was relatively rapid. However, due to the impact of the epidemic, the consumer confidence index has not continued to rise, but has continued to fall in recent months. In particular, the number of newly diagnosed cases of new coronary pneumonia has risen again recently, and the consumer confidence index has dropped sharply in August, the lowest level since December 2011.

The unexpected plunge in consumer confidence caused the interest rate of U.S. Treasury bonds to fall again, casting a shadow over the restart of the upward path. Near the end of August, Powell will attend the Jackson Hole Annual Meeting of Global Central Bank Governors and the important Fed’s monetary policy interest rate meeting in September, and the market may enter a turbulent trend.

In 2021, the Federal Open Market Committee of the Federal Reserve will be composed of 11 members. According to the monetary policy camp from dovish to hawkish, they are: Atlanta Fed Chairman Bostic, Fed Chairman Powell, Richmond Fed Chairman Ba ​​Jin, and Fed Governor Quarles , Fed Governor Bowman, New York Fed Chairman, Fed Governor Brainard, Chicago Fed Chairman Evans, San Francisco Fed Chairman Daley, Fed Governor Clarida, Fed Governor Waller.

Judging from the comparison of the opinions of the members of the voting committee, the number of dovish camps has not significantly decreased, and Richmond Fed Chairman Ba ​​Jin and Fed Board Member Brainard both gave their own unemployment rate standards or time. It can be seen that the probability that the interest rate meeting at the end of August and September will give a clear reduction of the table is relatively small. If there is nothing new in the central bank’s annual meeting at the end of August, US stocks may enter a period of rapid rise.