As a member of the G7, Canada's leading interest rate cut has attracted attention, followed by the European Central Bank also taking the same measure, lowering interest rates by 25 basis points. It appears that these developed countries were originally following the United States' pace, raising interest rates together, attempting to restrict China's liquidity and affect domestic demand in China through a financial alliance.

However, they have now begun to cut interest rates themselves, which implies that the previous strategy was not effective. This interest rate cut also seems to suggest the possible actions of the Federal Reserve in the future. The entire situation appears to indicate that the United States' financial strategy against China has not been successful, and now the movements of various central banks are also starting to undergo new changes. What does the new play in the post-financial war era mean for Chinese assets?

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The interest rate cut cycle has begun.

Recently, the global financial market is quietly undergoing a dramatic change that has attracted attention. Let's take a closer look, both the Bank of Canada and the European Central Bank have initiated the process of interest rate cuts, and the results are quite surprising.

Since the end of March 2020, the Bank of Canada took the first interest rate cut on June 5th, lowering the benchmark interest rate by 25 basis points to 4.75%. This move is not insignificant, as it indicates that the Bank of Canada's policy direction may undergo a significant shift.

Following closely, the European Central Bank announced a 25 basis point interest rate cut on June 6th.

After all, this is their first interest rate reduction after 22 consecutive months of increases, and it is clear that the European Central Bank is also seeking to change its strategy.

Behind these two major moves, there is a message revealed: both of them want to break away from following the path of the Federal Reserve.

The European Central Bank even made a special statement that there is no need to follow the Federal Reserve's pace, which further highlights their determination to walk independently.Speculations about the future direction of the market are gradually heating up. According to rumors, after the European Central Bank (ECB) announced a reduction in interest rates recently, there may still be a possibility for the bank to cut rates once or twice more within the year.

Although the interest rate cut plan for July has not been finalized, according to predictions by market analysts, the probability of a rate cut in September has climbed to as high as 60%.

This is not just an adjustment of financial operations, but also a response to the actual needs of the economy, as the ECB also mentioned the policy path for the second half of the year, which will be the focus of everyone's attention.

Analysts also predict that the Bank of England may follow the footsteps of Canada and Europe at the interest rate meeting in two weeks. It seems that the global financial policy is quietly changing, and these countries are trying to use rate cuts to support the economy or deal with an uncertain future.

Although the ECB's interest rate cut this time was expected by the market and communicated fully with the market, its actual impact still needs to be seen.

Given that the Eurozone economy has improved and is expected to achieve a growth of 0.8% this year, the situation of inflation is still severe.

Especially in May, the inflation level in the region not only did not decrease but increased, finally becoming a difficult problem faced by political decision-makers.

At the same time, interest rate cuts and appropriate relaxation of policies are expected to trigger a series of positive changes. For example, the gradual easing of the banking industry's credit environment and the gradual optimization of financing conditions will strongly support the daily consumption of domestic residents and the investment development of various enterprises. Especially for the manufacturing industry in the European Union region, this will undoubtedly become an irresistible driving force.

However, the realization of all these beautiful visions must be based on the policy being implemented as expected and effectively dealing with inflation and other economic challenges.

As for the Federal Reserve, the loose policy measures taken by other major central banks around the world will more or less bring a certain degree of pressure to it.Despite the Federal Reserve being highly unlikely to implement rate cuts at the upcoming monetary policy meeting this month, should global jurisdictions opt to ease their policies, the Fed may also need to reevaluate and adjust its own policy pace.

The United States is getting restless

The big issue in the global financial market now is that the United States really cannot remain seated.

On one side, the European Central Bank has begun to lower interest rates, and on the other side, the United States is experiencing economic fluctuations and market data continuously indicating economic pressures, indeed feeling unprecedented challenges.

Let's first look at the actions of the European Central Bank.

The European Central Bank cut interest rates by 25 basis points, causing significant fluctuations in the market. Originally, people thought that the euro would weaken due to the rate cut, but contrary to expectations, the euro did not weaken; instead, it has become increasingly strong.

This phenomenon reveals global investors' concerns about the U.S. economy and Europe's determination to gradually detach from its financial dependence and pursue greater economic independence.

As for the United States, the situation is also becoming severe. Whether it's the weakness shown by the manufacturing index, the decline in the ten-year Treasury bond rate, or the poor performance of key economic indicators such as the Consumer Price Index (CPI) and the Chicago Purchasing Managers' Index (PMI), all have served as warnings to the market.

These eye-catching economic figures have caused investors to lose trust in the U.S. stock market, even sparking discussions about a potential U.S. stock market collapse.What's more troubling for the United States is that their old followers, such as France, are no longer willing to play the role of a junior partner.

French President Emmanuel Macron has publicly declared his commitment to reclaiming Europe's sovereign independence, which undoubtedly poses a significant challenge to the United States, which has always relied on the support of its European allies to maintain its global hegemonic status.

With the European Central Bank implementing a rate cut policy and the continuous appreciation of the euro exchange rate, the global financial market's demand for U.S. Treasury bonds has gradually decreased, directly affecting the downward trend of U.S. Treasury bond yields and further increasing the depreciation pressure on the U.S. dollar.

In other words, the current international situation poses a severe challenge to the United States in terms of financial strategy.

All these profound changes point to far more than just a simple game of numbers.

Europe's rate cut not only affects the global flow of funds but may also change the policy direction of central banks around the world. If the Federal Reserve decides to follow suit with a rate cut in its upcoming meeting, the vast amount of funds that previously flowed into the United States may begin to withdraw, which would be a huge blow to the U.S. domestic financial market and economic prospects.

And if funds flow out of the United States and into other markets, such as China, this will bring even more challenges to the United States. It is not hard to imagine that if the Federal Reserve's policies cannot be adjusted in a timely manner, the United States may gradually lose its advantage in the global financial market.

On the other hand, China is consolidating its position in the global economy by strengthening cooperation with European countries. China's recent state visits to France, Serbia, and Hungary are a good example of this.

This diplomatic strategy not only strengthens China's relationship with Europe but also weakens the United States' global influence to some extent.

Therefore, the current situation is very complex and difficult for the United States.They urgently need to find a perfect balance between maintaining their global leadership status and dealing with domestic and international economic pressures. This requires the Federal Reserve and the U.S. government to implement more flexible and visionary policy orientations; otherwise, they may face many unpredictable economic and political challenges. At this stage, it seems that the overseas impact triggered by this round of financial warfare has almost reached its peak. If there are still potential risks of short-term market fluctuations in the future, China has the ability to demonstrate a good response by timely adjusting the total amount of U.S. Treasury bonds it holds. However, for the United States itself, it is undoubtedly a key turning point that determines the overall situation. Any of their decisions or actions will have a profound impact on the development trend of the global financial market.

New rules in the post-financial warfare era

The interest rate cut implemented by the European Central Bank this time cannot be denied that it contains more than just a simple adjustment and control of the macroeconomy; it more deeply reflects a strategic planning and deployment. On the surface, this interest rate cut seems to be just a routine economic policy operation, but in fact, it hides complex and far-reaching considerations behind it. For a long time, the U.S. dollar and the euro have always been the two most important participants in the global currency market, and now, the renminbi is also gradually rising and emerging.In this tripartite situation, any policy change in each currency area will attract close attention from the other two.

The interest rate cut implemented by the European Central Bank this time is actually seen as having taken a leading position on the global financial strategic stage.

It is well known that the US dollar, as the undisputed dominant settlement and reserve currency worldwide, its strength is indeed undeniable.

However, we also need to recognize that the hegemonic status of the US dollar is not unbreakable, and the rise of the euro and the renminbi poses a serious challenge to it.

Especially in the current situation where the global economy is changing rapidly, the strategic deployment of the US dollar also needs to be adjusted in a timely manner to better meet various tests from the external environment.

The interest rate cut by the European Central Bank this time is actually a challenge to the US dollar.

Through the interest rate cut, the cost of funds in the euro area is reduced, which will promote the flow of funds in the euro area to the global market, especially tied to China's production capacity leverage, which is a considerable challenge to the US dollar.

Because once the funds in the euro area flow into the Chinese market, the US dollar will face greater pressure, especially under the trend of global economic integration, such behavior of the euro may weaken the global influence of the US dollar.

The Chinese market is very attractive to global capital, not only because of its huge market size, but also because of China's key position in the global industrial chain.

If the euro can take the lead in tying more closely to the Chinese market through the interest rate cut, it will undoubtedly be a great benefit for the euro area.For the US dollar, this means that a reassessment of its global strategy is necessary, and it may even accelerate the pace of rate cuts by the Federal Reserve to maintain its competitiveness as a global currency.

In this grand chessboard of international finance and economy, China's role is also crucial. As the world's second-largest economy, every economic decision made by China has a profound impact on the global market.

Especially against the backdrop of current Sino-American economic frictions, how China responds to the financial strategies of Europe and America is not only about China's own economic security but also about the balance of the global economy.

With the changing global economic landscape and the complex geopolitical situation, the cooperation between China and Europe has also highlighted unprecedented new opportunities.

Should China and Europe be able to further deepen their collaboration in various fields such as industry and finance, there is no doubt that it would yield substantial and mutually beneficial outcomes for both parties.

Conversely, if the United States fails to respond to these changes with appropriate strategies, it may gradually perceive a decline in its influence on the global economic stage.

In summary, this round of rate cuts by the European Central Bank is not just a simple monetary policy adjustment but also an important move in the global financial strategy.

The financial and economic interactions between the United States, Europe, and China will become more complex, and each country will need to adopt more flexible and forward-looking strategies to cope with this rapidly changing world.

For us, understanding the logic and strategic intentions behind these moves is key to understanding the trends in the global economy.