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· 2024-09-10 08:19
When the market generally predicts that the Fed may cut interest rates, will it be a hard landing or a soft landing?
- On the borrower's side, they will prioritize short-term loans rather than choosing long-term loans to get future lower Intrerest Rate adjustments.
- As short-term borrowing demand is higher than long-term borrowing demand, banks will also reduce long-term deposit Intrerest Rate and increase short-term deposit Intrerest Rate.
- For depositors, they will prefer short-term deposits rather than long-term deposits, as the Intrerest Rate is higher.
- For speculators, of course, they will consider short selling long-term bonds and Long short-term bonds to earn the price difference.
0.5 or a continuous decrease of 0.5 or even 1%. Overall, if it decreases slowly, there will not be too many opportunities for speculators, while if it drops sharply, speculators either have to close all positions or make a big profit.
=> The current issue is still whether it is a soft landing or a hard landing, and the answer will be determined within six months after the Fed begins to cut Intrerest Rates. The reason for the six months is that this is three Intrerest Rate cycles and 1-2 short-term borrowing cycles (3 or 6 months) of time.
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