Castle Securities: Under Walsh's leadership, stop counting on the Federal Reserve to bail out the market

On June 29, Castle Securities said that investors underestimated Federal Reserve Chairman Walsh's determination to pull inflation back to the central bank's 2% target and the drag this policy orientation might bring to risky assets. Norshad Shah, the company's head of fixed income sales, said that despite the recent decline in oil prices, this is not enough to weaken the Fed's reasons to continue raising interest rates because underlying inflationary pressures remain high. At the same time, the stock market rally driven by the AI industry is becoming increasingly fragile. Shah said that unlike the post-epidemic period, when investors generally believed that the Federal Reserve would provide support whenever the economy slowed down or financial markets plunged, Vash has now clearly signaled that high inflation has become a constraint. "The market landscape may be changing," he wrote. As a result, policymakers will be less likely to bail out the market in the future, which means that the market has long believed in the concept of the "Federal Reserve Put" may change. The so-called "Federal Reserve puts" refer to the market's belief that the Federal Reserve will provide investors with de facto downside protection by easing monetary policy when the market falls.