Next week's Federal Reserve policy meeting may see a "major adjustment" in communication mechanisms, and the market's pricing logic faces a restructuring.

Mars Finance News: On June 12, Pacific Investment Management Company (PIMCO) said that the upcoming Federal Reserve meeting is not only about interest rate decisions, but may also signal a shift in the policy communication framework. The incoming chair, Kevin Wàsh, may reduce forward guidance and weaken the “dot plot,” and the market may be forced to judge the interest-rate path on its own.

Richard Clarida, the former Vice Chairman of the Federal Reserve and the current Global Economic Advisor at PIMCO, said investors are still adapting to Wàsh’s communication style, and his policy philosophy may gradually be reflected in tighter information disclosure. During the hearing, he made it clear that he “does not believe in forward guidance.” Accordingly, the market expects the Federal Reserve may shorten its statement, reduce references to the dot plot, and even lower the frequency of communications.

PIMCO Chief Investment Officer Daniel Ivashyn believes that a contraction in communication could increase market volatility, but it could also create opportunities for active investing. He noted that, at the current interest-rate level, the reference value of tools such as the dot plot has clearly declined, and the market now has a stronger ability to price independently.

Ivashyn also emphasized that adjustments to the balance sheet would likely have a more substantial impact than changes in communication methods. The Federal Reserve’s balance sheet is currently about $6.7 trillion. If balance-sheet reduction and adjustments tied to the interest-rate path are coordinated, it could have a significant effect on the structure of the yield curve.

Market participants noted that, against a backdrop where uncertainty about inflation and growth remains high, if the Federal Reserve further weakens forward guidance, short-end interest rates and long-end yields may decouple, increasing the complexity of global asset pricing.