Castle Securities: Under Wash's leadership, don't expect the Fed to bail out the market anymore.

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Jinse Finance reports that on June 29, Citadel Securities stated that investors have underestimated Federal Reserve Chairman Walsh’s determination to bring inflation back to the central bank’s 2% target, as well as the potential drag this policy stance could have on risk assets. Noshad Shah, the company’s head of fixed income sales, said that while oil prices have recently fallen, this is not enough to weaken the case for further rate hikes by the Fed, as underlying inflationary pressures remain high. Meanwhile, the stock market rally driven by the AI sector is becoming increasingly fragile. Shah noted that unlike the post-pandemic period, when investors generally believed the Fed would step in to support the market as long as the economy slowed or financial markets plunged, Walsh has now clearly signaled that high inflation has become a constraint. He wrote: “The market landscape may be changing.” As a result, the likelihood of policymakers intervening to rescue the market in the future will decrease, implying a potential shift in the long-held market belief in the “Fed Put.” The so-called “Fed Put” refers to the market’s confidence that the Fed will provide de facto downside protection for investors by easing monetary policy when markets decline.
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