Opinion: Beware of "all the good news priced in" after the new Federal Reserve Chair takes office; uncertainty will erupt intensively from July to November

BlockBeats News, December 29, Nomura Securities issued a warning, predicting that after the new Federal Reserve Chair takes office in May next year, they will lead a rate cut in June. However, as the U.S. economy recovers, there may be strong internal opposition within the Fed to further rate cuts. Policy disagreements will not only undermine market confidence in the new Chair but may also trigger tensions between the Fed and the Trump administration. If the Fed keeps rates unchanged after the June meeting, it will inevitably clash with Trump, who is demanding further rate cuts to boost the midterm election campaign.

Nomura expects uncertainty to erupt intensively from July to November next year, during which the market may see a "flight from U.S. assets," leading to a decline in U.S. Treasury yields, a correction in U.S. stocks, and a weakening dollar. Investors should be alert to potential liquidity reversals during this period. Major global economies may also halt rate cuts or even start a rate hike cycle, thereby weakening the relative advantage of dollar assets. The policy deadlock, combined with bottoming inflation and signals that the Fed is ending its rate-cutting cycle, will intensify market volatility.