With less than 16 hours to go until the September rate hike is announced, there is really no analysis at this point in time, and the decision is in the hands of the Fed, whether it is the dollar index, whether it is the US bond yields, whether it is the volume of money in the currency market, whether it is the BTC and ETH selling, it doesn't matter in this absolutely market-controlled situation, this is the central world, although the BTC tries to break it. So today's analysis doesn't say anything about the data, because it won't help, because after all, it's a 50/50 split, and no data will change the Fed's final decision, and since there may be no consensus in the Fed yet, today's analysis will mainly be about what will happen Thursday morning when the 2 a.m. rate hike and the terminal rate come along, and how to respond. One was written in the first half of the month, but that was before the CPI was released, and the macro-sentiment changes were different after a while, so another analysis of the possibilities was made according to the latest market expectations. This time, there is no need to consider raising rates at all. After all, 75 basis points is already a distinct possibility, and anything below 75 or above is almost impossible, so the focus is on the terminal rate to be announced tomorrow. The terminal rate is also called neutral rate, which means the rate of the U.S. federal funds rate, and this is exactly what will happen when the rate is increased. Currently, after the increase in July, the rate is 2.5%, and after the end of the increase in September, the interest rate will rise by 3.25% (2.5%+0.75%). And the Fed currently has two possible rate increases, namely in November and December (it is very unlikely that the October meeting for temporary rate increase will be held). The combined two-month rate hike, plus the subsequent 3.25% hike, is the final rate in 2022, which will determine the expected hike in 2023. A terminal rate of 4% in 2022 and 5% in 2023 would mean the last two hikes in 2022 would total 75 basis points, or roughly 25 basis points The combination would be 75+0, 50+25, 25+50, and 0+75, with a rate increase of 100 basis points for the whole of 2023. Looking at this, it should be clear to a lot of our little friends that 2022 was, in every sense, the toughest year of all, because the biggest chunk of the increase was in 2022, and there is little chance that 2023 will see more than 2022. This is about US Treasury revenue and spending on Treasury rates. It's not much discussed here; on balance, economists calculated in the last two months that the maximum the Fed can raise is 7%. Once it exceeds 7%, the US Treasury may be unable to make ends meet, ruling out the benefits of selling new Treasuries to pay off old ones. This is the standard death spiral, and the economic impact of rate hikes typically lags over six to 18-month cycles that would indicate the power of rate hikes, starting in March and ending now and ending about six months later, so inflation would most likely start to improve in the second half of 2023 The Fed's 2022 end-rate choice determined the risk market's trajectory from September to November. The first is to split the terminal rate into three possibilities: 1. Less than or equal to 4% (<=4%) 2. equal to 4.25% 3. Greater than or equal to 4.5% (>=4.5) Because we all know that interest rate hikes are multiples of 25, even the other numbers in the bitmap end up in these three bands. If it is (1), then there is no doubt that the next two months will bring a rate increase of 75 basis points at most. No matter what happens, this will change the Fed's tapering attitude. The overall risk market will have a rising trend after the announcement. It should perform well by the end of September, even if there is a core PCE reading. After all, the direction of the rate increase is already set. The only change is the September CPI data released in October. We have analyzed this before. Judging from current trends, the September CPI is even lower than the year-on-year and month-on-month data. The drop in oil prices is currently $5. Both new and used cars are on a downward trend, but this is not a large share. Of the two larger shares, food tends to decline and housing tends to rise. Of course, Biden's $80 purchase of strategic oil also forced the oil merchants to bring the price down to around $80, so it's quite possible that after September the price of oil could fall as low as $7 to $8, but the core CPI, which excludes energy and food, is not expected to fall, because housing is the main driver. So October's CPI is the only possible change, and as for November's CPI, don't worry too much. If it stays high, Powell can step down. But even so, it means that before the release of the CPI in October, the risk market will see a wave of decent increase. Since the mid-November US mid-term election is just around the corner, the Democratic Party will inevitably introduce some measures to stimulate the economy if it does not want to step down, even if they are only for the short term, such as purchasing strategic oil, and controlling the US oil price through strategic oil during the mid-term election to reach the sign of falling oil price. This is the best move for risk markets. If this happens, I will personally start a small number of positions immediately (BTC and ETH only), a small number to prevent the market from unexpected changes, and then will pay more attention to the non-farm and CPI data for October. If I find that the trend is wrong, I will most likely leave the cost part and continue to profit. Terminal interest rates are ready to be bought at market prices before they are announced. Then there is (2), the terminal rate in 2022 is at 4.25%, which means that after a 75 basis point hike in September, the Fed will have three options in the remaining two rate hikes: 75+25, 50+50 and 25+75. If this happens, the 75+25 combination offers a relative chance of salvation for the markets, as bad as it will be, after all represents the last big rate hike in November, and the chances are 25 basis points after that. If this happens, the risk market will rise for a short period of time because it expects 75 basis points, but it will inevitably fall because of the rise of the dollar index the next day or a few days later. In addition, when the terminal interest rate is decided, the trend of U. S. debt will be more stable, and the colonial interest rate will rapidly approach the post-increase expectations, thus introducing some capital to the market, especially the short and medium-term U. S. debt will have a buying spree. October will be choppy, with the Fed waiting to see if it continues to adjust once the October CPI comes in. That is, the macro sentiment at the 4.25% end rate is about the same as it is now, with little impact on the market, which is expected, so the game's focus will shift to October's CPI or even the midterm elections. If this happens, I personally won't rush into it, and will wait for a more appropriate time. If the final end-rate decision for 2022 is above 4.5%, that is (3). That means that after the 75-basis-point hike in September, the Fed will raise rates by 125 basis points in November and December. Whether it is 75+50 or 50+75 will be a big blow to risk markets. With this figure in place, we can just wait for a new low in risk markets in early September and the dollar index will surely break through the high. This led to a flight of capital from risky markets, and as the terminal rate dictated, U.S. Treasury colonial rates would rise sharply, with the possibility of a 2-year yield of more than 4.5% and a 10-year yield of more than 3.5% or even 4%, which would mean that low-risk demand capital would abandon the risky market and move into bonds, since the 4% risk-free rate is a big-money dream For example, Fidelity 401(k), which has opened the BTC purchase window, is expected to say goodbye to BTC very soon. And once that happens, October's CPI data will hardly change the Fed's market toughness, even after the mid-term elections in November, when the Democratic Party is no longer in the same camp. While it's not clear that the mid-term election will be a loss, the odds of victory are very low. In particular, the likelihood of an end to the 56-year streak of 14 consecutive US midterm elections, in which the S&P 500 trended higher, would be a disgrace for the Democratic Party, which the next analysis of market trends will surely argue is the party that ended America's historic sword hunt for power and will live on. Such historic stains can only be washed over time. If this happens, it may not be the right time to build positions. The risk market will continue to fall for a long time to come, and even a sharp decline may occur. The best solution is to wait until the bottom shape appears and start slowly building positions. We still need to pay attention to the US mid-term elections in November and the CPI data in November. It may even be winter to 2023. Finally, there is the outlook for 2024. Although it is still a little early to say, it is foreseeable that 2023 will definitely be the beginning of a turning point no matter what happens in 2022. We can gradually start to try to build up positions. Some hikes may not happen in 2023, but we cannot rule out another low point in 2023. The main reason is that inflation in the United States. The real hikes will certainly happen as the Fed reduces interest rates. And that's likely in 2024, which is the halving cycle of the BTC, whether or not it lasts, but if it doesn't happen, there's a chance, there's a hope. It's no good talking now. We'll see