The Zhitong Finance App learned that Salman Ahmed, head of global macro and strategic asset allocation at Fidelity International, said that the US Federal Reserve remained on hold for 5 consecutive times yesterday, maintaining the federal funds rate range at 3.5 to 3.75 percent, which is in line with market expectations. The current interest rate decision was passed with a 9 to 3 vote. Among them, 3 members voted against it, favoring a 0.25% increase in interest rates. After this meeting, the market is likely to further lower interest rate hikes in the near future, and the yield curve shows a steeper trend: short-term yields declined as expectations of interest rate hikes cooled in September, long-term bonds were sold off because medium- to long-term inflation, fiscal and policy prospects were still uncertain, and the yield on 30-year US bonds rose 11 basis points to 5.20%, reaching a new high since July 2007.
However, as President Trump threatened to “hit hard” Iran, and geopolitical tension in the Middle East heated up, the price of Brent crude oil once rose to 90 US dollars. Coupled with growing market concerns about artificial intelligence (AI) related capital expenses, potential oversupply, and rising long-term yield, the US stock market declined across the board, leading the decline in semiconductor and memory stocks, and large technology stocks generally fell.
Fidelity believes that the Federal Reserve is likely to delay until December before starting the interest rate hike cycle, provided that inflation and labor market data continue to be strong. However, economic data and geopolitical developments in the next two months may still re-fuel the risk of inflation, so the possibility of a rate hike in September has not been completely eliminated. More importantly, this decision highlights the policy characteristics of the Walsh era: in the absence of a clear policy framework and forward-looking guidance, the Federal Reserve will rely more on immediate economic data and changes in the financial environment to make judgments. This means that market expectations for policy paths may be adjusted frequently, and interest rates and asset prices are also more likely to fluctuate according to data and official statements. Policy uncertainty and market fluctuations remain high, and may become the new normal in the Walsh era.
Recently, the tense situation between the US and Iran has once again heated up, and investors' concerns about AI-related capital expenditure, potential oversupply, and rising long-term bond yields have led to increased market volatility. However, these factors currently mainly affect market sentiment and valuation, and have not changed the fundamental trends in the global economy and corporate profits. Corporate profits remain steady, and fiscal policies and AI investments continue to support economic activity; AI is still an important long-term growth theme, global economic expansion has not been interrupted, and it is still beneficial to risky asset performance in the medium to long term.
In terms of investment strategy, there is still potential for corporate profit growth. Fidelity maintains additional stock allocations, and is relatively optimistic about Japan and emerging markets where valuation and profit momentum are ideal; however, large US technology stocks are highly valued, so we still need to pay attention to market concentration and AI investment returns. On the bond side, inflation, fiscal expansion, and policy uncertainty may limit the downward space for long-term yield, so it remains neutral on government bonds; at the same time, since credit spreads have narrowed drastically, Fidelity is cautious about credit bonds. Investors can dynamically adjust global multi-asset strategies to cope with the current market environment of increased volatility, and pursue long-term returns that seek steady victory by combining global dividend strategies with profitable characteristics and high-quality bond allocations with high-quality companies as the core.