Misjudgment of market expectations

UBS analysts suggest that the market may have misjudged the magnitude of future interest rate cuts by the Federal Reserve. The report points out that investors' expectations of interest rate cuts have driven market sentiment, but the endpoint of loose policies is more important for investment.

Market Expectations and UBS Perspectives

UBS expects the Federal Reserve to cut interest rates more than market expectations, believing that the long-term interest rate of 2.75% is significantly different from the market's expected 4%, and the market underestimates the number of possible rate cuts by the Federal Reserve throughout the entire cycle.

Strong stock market performance

Despite the expected changes in the Federal Reserve's actions, UBS emphasized that the S&P 500 index has performed strongly this year, indicating a stable economic fundamentals. UBS believes that the timing of the first rate cut (whether in September or December) has little impact on the market.

Policy interest rates and economic data

UBS focuses on the yield of 10-year US treasury bond bonds and believes that the upcoming Jackson Hole Economic Seminar will strengthen the review of current policy restrictions. Recent economic data (such as consumer confidence index, job vacancies, inflation, etc.) indicate economic weakness, supporting the Federal Reserve's interest rate cuts.