Topic #1: Fed’s Interest Rate Hike Battle

In this week’s market update, the Federal Reserve (the Fed) increased the benchmark interest rates by 0.25 percentage points, bringing it to 4.5%-4.75%. This move was widely expected and is part of the Fed’s commitment to maintaining transparency and stability in the markets. Last year, higher interest rates impacted the values of long-term assets such as Treasury bonds and technology stocks. But this year, stocks and bonds have been rallying, as investors expect lower inflation rates to lead to lower interest rates.

How have markets reacted?

The Fed wants to maintain a positive real interest rate, which is achieved when the interest rate is higher than the inflation rate. This tighter monetary policy slows down economic growth and helps bring inflation down to the long-term target of 2%. So far, the stock market seems to be optimistic about the future of the...