Zhongjin: The US dollar index may return to the weak volatility range

The research report from Zhongjin Company believes that since June, the market has entered into a period of continuous adjustment: on one hand, the US dollar index has broken through the upper limit of its volatility range of the past year; on the other hand, global capital markets, particularly those influenced by AI prosperity and US dollar liquidity, have experienced a general correction. Within the US stock market, there has also been a style adjustment, with defensive sectors taking the lead. The report believes that the main driving forces behind this series of adjustments are the fermentation of interest rate hike expectations and the marginal tightening of US dollar liquidity. It reiterates its previous judgment that the Federal Reserve will be "hawkish in name, dovish in reality" this year, and that what may actually materialize will be deregulation of the banking industry in order to maintain the prosperity of the investment cycle and to give AI more time to improve economic efficiency. The market may start "lag curve" trading after this round of adjustment, with the US dollar index possibly returning to a weak volatility range. Real assets, industrial sectors, and technology still have expansion potential, and attention should be paid to the role of financial deregulation in driving traditional cyclical sectors.