July 30 International Forex News

Investors Are Taking Profits from U.S. Tech Stocks at a Record Pace

July 30: According to institutional analysis, so far in July, the equal-weighted Nasdaq 100 index has underperformed the equal-weighted S&P 500 index by 6.8 percentage points, potentially marking its worst monthly relative performance on record. Before this, equal-weighted tech stocks had outperformed the broader market for four consecutive months. Over the past 20 years, there has never been a case where the average performance of technology stocks lagged the average performance of the S&P 500 by more than 5 percentage points.

At the same time, the equal-weighted S&P 500 index has risen 2.2% so far this month, staying near historical highs. The equal-weighted Nasdaq 100 index, however, has fallen 4.6%, close to its lowest level since mid-May. Investors are taking profits from technology stocks at a record pace.

CICC: Warsh Tries to “Outsource” Part of Tightening Function, Which May Lead Markets to Price in the Fed Acting Too Late

July 30: A CICC research report said that the Federal Reserve kept interest rates unchanged at its July meeting, but hawkish forces within the Fed strengthened further, with three voting members supporting a 25 bps rate hike.

CICC believes the biggest change at this meeting was not the rate decision itself, but Warsh’s attempt to reduce policy intervention and rely more on spontaneous increases in market interest rates to tighten financial conditions, effectively “outsourcing” part of the tightening function to the market. However, against the backdrop of inflation remaining above target, this approach could easily weaken market confidence in the credibility of Fed policy.

After the meeting, long-term U.S. Treasury yields rose sharply and the curve steepened significantly, possibly reflecting investors beginning to price in higher long-term inflation and policy risks. Looking ahead, CICC believes that if employment or inflation data exceed expectations, the market will not only further raise expectations for a September rate hike, but may also price in the risk that the Fed is acting “too late.” Long-term interest rates may rise further, and risk assets will face greater adjustment pressure.