It Is Neither Too Late Nor Too Late To Raise Interest Rates In The United States.

If the Federal Reserve raises interest rates next month, the domestic people can not be belittled at all. They think they have nothing to do with themselves, but in fact, they will also bring great impact. However, this kind of impact is not so direct because China's capital account has not been released and the RMB can not be freely convertible, but in fact, this kind of warm boiled frog style impact is really domestic.

It is too late to feel that it will be reflected again.

Chinese residents and investors should be prepared. The global allocation of their assets is a good choice.

Therefore, the United States increases interest rates, the Chinese market is not a Shangri La.

Yellen, chairman of the US Federal Reserve, attended the hearing of the Joint Economic Committee of the United States Congress, saying that the US economy was growing moderately, and that the time to raise interest rates had been "pretty close" (relativelysoon) and implied that the chances of raising interest rates were high next month, but she stressed that the rate hike would be gradual.

It can be said that this is the first time this year that Yellen has made it clear that the timing of raising interest rates is close. In December this year, the Fed's rate hike is expected to be difficult to reverse.

So when the news was introduced into the market, the US dollar exchange rate index hit a new high of 14 years, and the US stock market was also stable.

In his testimony, Yellen warned that too late interest rates would have a serious negative impact on the economy, such as the sudden need to prevent economic overheating in the future, and that maintaining interest rates for too long would lead to high risk in the market and jeopardize the stability of financial markets.

So more than 90% of analysts in the market think the December Federal Reserve will.

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Of course, Yellen is so sure about raising interest rates, which is mainly related to the recent economic trends in the United States.

The data released on Thursday showed that the economic boom continued to grow. For example, in October, the consumer price index rose for 3 consecutive months. The US Department of labor announced that the consumer price index (CPI) increased by 0.4% in October, which was in line with market expectations. After the deduction of food and energy, the core CPI increased by 0.1%, which is lower than the estimated 0.2% increase in the market.

Compared with the same period last year, CPI increased by 1.6%, and core CPI increased by 2.1%, the largest growth rate in 2 years, and slightly higher than the 2% target set by the Federal Reserve for the annual inflation rate.

Reflecting the steady growth of the US economy.

In particular, the rise in gasoline and residential consumption makes inflation pressure continue to increase.

In October, CPI grew by seventh months in the past 8 months, and its growth rate is accelerating.

Last week, the number of people receiving unemployment benefits reached a new low of 43 years.

Last week (until November 12th), the number of initial jobless claims dropped by 19 thousand people, which dropped to 235 thousand after the quarterly adjustment, far below the market forecast of 255 thousand people, a new low since November 1973, and a 300 thousand week low for 89 consecutive weeks, keeping the record below that level for 1970.

In October, the number of new housing starts unexpectedly rose and hit a 9 year high, indicating that housing demand grew steadily.

The US Department of Commerce announced that the number of new housing starts increased by 25.5% in October, reaching an annual rate of 1 million 323 thousand, up from 1 million 200 thousand households predicted by the market, reaching a new high in 2007.

The number of households in September has also been adjusted from the original 1 million 47 thousand households to 1 million 54 thousand households.

All these data indicate that the housing demand in the United States is growing steadily, which means that the income growth of residents is continuing.

It is these bright data that add to the Fed's interest rate hike in December.

We should remember that from the middle of 2014,

They issued a signal to tighten monetary policy.

It is also from this time that the global market's rapid flow of nearly 18 trillion US dollars immediately reversed, which not only caused a huge shock in the international market, but also changed the interest pattern of the international market as a whole.

For example, the price of international crude oil and commodities began to plummet.

Because in the current international monetary system dominated by a credit currency and a US dollar, the US monetary policy is aimed at both the domestic economic situation and the global monetary policy, which will have a huge impact on the global market.

It can be said that if the Fed raised interest rates in December, it would mean that the US monetary policy would further tighten. Although the tightening of monetary policy would be gradual, it would lead to global capital flows to the US dollar or dollar denominated assets, especially in emerging markets.

Due to the recent strength of the US dollar, the outflow of funds in Hongkong, Taiwan, Korea, Indonesia and other Asian regions is even more obvious.

The flow of funds in these areas will naturally lead to huge shocks in the stock market, foreign exchange market and bond market.

The recent decline in the stock market in Hongkong is related to the massive outflow of such funds.

At present, the RMB has been depreciating for nearly 10 days. Although the depreciation of China's RMB exchange rate is not the reason why the US dollar is strong, it can not be said that it has nothing to do with it.

At present, the Chinese government is gradually making the RMB exchange rate marketization, making the RMB exchange rate more flexible.

If we look at the RMB basket exchange rate, the depreciation of the RMB exchange rate will be very natural when the non dollar currencies depreciate in full.

However, for domestic residents and investors, the Chinese government's double anchor to the RMB exchange rate does not mean that the residents' investment is also taken as the benchmark.

Most of them are based on changes in the US dollar.

If the US dollar continues to be strong, and the RMB exchange rate will continue to depreciate (over a year has depreciated more than 10%, this year's depreciation will reach nearly 6%).

This will also cause huge fluctuations in asset prices in China, such as the massive outflow of funds, which is neither conducive to the stock market nor to the property market.

Therefore, the United States increases interest rates, China is not a Shangri La, and vice versa, the impact will be huge, but for China such a big market, sometimes it is not so obvious, but smart domestic investors have long been concerned about this.

For example, this year's massive flood of funds into Hongkong to buy stocks, insurance, housing and so on is the best evidence.