Shenwan Hongyuan: The main contradiction of financial pressure may be the "dove turning" of the Federal Reserve.

Shenwan Hongyuan released a research report stating that facing the stagflation risks that may be triggered by tariffs, the market has a large difference in expectations for a rate cut by the Federal Reserve. The US economy faces the risk of "stagflation turning into a recession" under the impact of tariffs, and financial pressure may become the core variable for the Fed's policy shift. Currently, manufacturing PMI continues to shrink, commercial real estate debt risks are accumulating, and with the increase in stock market volatility, it may force the Fed to start cutting rates in the third quarter of 2025. The bank predicts that if the financial pressure index surpasses the threshold, the rate cut for the whole year may reach 75-100 basis points, and recommends paying attention to opportunities for US bond yield decline and strategic allocation of the Nasdaq.