SoSoValue: The market overreacted to the Fed's signals, and risk assets generally pulled back, but the fundamentals remained unchanged

According to SoSoValue, the Federal Reserve cut interest rates by 25 basis points as expected, but hawkish expectations caused market panic, and the VIX index rose to the highest level since the Bank of Japan's rate hike in August. The FOMC meeting on December 18 lowered the federal funds rate target range to 4.25%-4.50%, and reduced the expected rate cuts next year from four to two, while raising the forecasts for core PCE inflation and GDP growth. Analysts pointed out that the market overreacted to the Fed's signals, the US dollar strengthened significantly, and risk assets generally retreated, but the fundamentals of the US economy remained unchanged. Strong consensus assets such as cryptocurrencies are still the focus of capital inflows, and the current pullback may be an opportunity to position. It is suggested to maintain risk exposure.