Federal Reserve officials have suddenly made dovish remarks, turning the rate hikes intended to control inflation into a bubble drama, yet constantly disturbing the global financial markets.

Last night's closing saw synchronized gains in European and American stock markets, and in the Asian morning session, Japanese stocks also opened higher.

However, the economic data from Europe and America did not perform as ideally as expected.

01, Reversal

The President of the Atlanta Federal Reserve recently stated that the interest rates continuously raised by the Federal Reserve may only show their effects after a period of time, hence the pace of rate hikes by the Federal Reserve should be slowed down to observe their impact on the economy.

Clearly, this official opposes a 50 basis point rate hike in March, and he even further pointed out that it is very likely that a pause in rate hikes will be needed in the mid-to-late summer.

This is obviously completely different from the previous hawkish expressions. After the recent inflation and employment data were announced, the Federal Reserve was inclined to continue raising rates, and even increase the magnitude. Predictions for the terminal interest rate have already been raised to above 5.6%.

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02, Market Performance

In fact, the President of the Atlanta Federal Reserve also indicated that, due to uncontrolled inflation, rate hikes should continue, but his expression seems to have been deliberately overlooked by the market.

Investors are focusing on the point that rate hikes will stop this summer.Influenced by this, the U.S. stock market has started to rise again, with the S&P 500 index up by 0.76%. All 11 sectors covered are generally on the rise, with utilities leading the way with a gain of over 1.8%, and technology information also up by 1.3%.

The S&P 500 index is now just a step away from the 4,000-point mark.

The NASDAQ index also rose by 0.73% last night.

Microsoft and Google saw gains close to 2%, but Tesla plummeted nearly 6%, perhaps significantly related to the company's long-term strategy release that the market perceived as falling short of expectations.

Although the performance of the Hong Kong stock market was quite ordinary during the Asian trading hours yesterday, the NASDAQ Golden Dragon China Index rose by 2.66% during the U.S. trading hours last night, indicating that the trend of Chinese concept stocks is stronger than the overall market.

In terms of individual stocks, Bilibili rose by 9.7%, Pinduoduo by 5.2%, and the gains for NetEase and Baidu were between 4.5% and 5%.

In the foreign exchange market, the rise of the U.S. dollar index has halted, maintaining around the 104 level in recent days. If it does not rise now, it is estimated that the U.S. dollar will enter a depreciation channel again.

03, Fed Disappointment

The European stock market, which closed earlier, also generally rose, with Germany's increase being relatively small at 0.15%, while France's gain reached 0.7%.

The synchronized rise in European and American stock markets, could it be that the market sentiment is daring to be optimistic again?On the other hand, although it has been a year since the interest rate hike, the past eight rate increases have ranged from 25 basis points to 75 basis points, and the cumulative interest rate has increased by 450 basis points. However, it appears that inflation has not been effectively controlled, and the labor market has not shown any signs of slowing down.

Furthermore, after the release of Europe's inflation data, it did not meet market expectations, indicating that inflation remains very stubborn.

These seem to be signals that the US and Europe should continue to raise interest rates significantly.

In particular, the US employment data remains very strong, with the number of unemployment claims last week at 190,000, which is lower than market expectations and the previous week's figures.

At the same time, the number of people continuously claiming unemployment benefits, at 1.655 million, is also slightly less than market expectations, which seems to indicate that labor performance remains robust.

The Federal Reserve has been raising interest rates for a year, but it has no solution to the tight labor market.

The Federal Reserve should be very disappointed by this, as if it cannot suppress wage increases, it will inevitably lead to price increases, and this spiraling inflation will continue.