This”Deflationary trade“Financial institutions that have dominated financial markets since the emergence of the coronavirus vaccine last year have been hit hard after the outbreak. U.S. Federal Reserve Unexpectedly, it showed that its stance on inflation has changed.

Earlier this week, the Fed reacted to unexpectedly strong inflation data. After responding to guidance on when it might appear, commodity prices plummeted, while long-term U.S. government bond prices soared. Start to raise interest ratesOn Friday, the U.S. dollar will have its best week since September last year.

For investors eager to buy securities that may benefit from faster inflation this year, the Fed’s move marks a major setback. They bet that unusually loose monetary and fiscal policies and the emergence of a global economy due to the Covid-19 lockdown will lead to Price spikes.

This Unexpected central bank pivot It has raised doubts about how much inflationary pressure the Fed is really willing to bear. The central bank also hinted that it will soon begin to discuss when to reduce the monthly bond purchases of US$120 billion.

“If the Fed smells signs of inflation at any time, they will step in and bring it back down. Why would investors worry about long-term inflation?” said Michael Pound, Barclays Global Head of Inflation Research. “The more the Fed is concerned about excessive inflation, the less the market should worry about it.”

The market stabilized in early trading on Friday, precious metals rebounded slightly from the previous day’s decline, and bond yields hardly changed. The U.S. dollar index, which measures exchange rates against major currencies, rose 1.4% in a week.

Evercore ISI vice chairman Krishna Guha (Krishna Guha) said that the sharp volatility on Thursday was because some investors were forced to liquidate reinflation transactions when the market was not good for them.

Natural resources suffered the most. On Thursday, the Bloomberg Commodity Price Index fell 3.6%, the biggest one-day drop in more than a year, and WTI oil prices fell 1.5%.

The so-called America Value stocks -Usually cheaper, unpopular companies that are more sensitive to the rate of economic growth-fell another 1.3% on Thursday, continuing the initial decline on Wednesday when the Fed announced the news. The MSCI Global Value Stocks Index fell 1.2% on Thursday.

The Russell 2000 index of small American companies fell 1.1%—the biggest reversal in more than a month—and the price of a troy ounce of gold fell to a two-month low of $1,773 on Thursday, before rebounding slightly on Friday.

However, other assets also benefited from it.The possibility that the Fed will let inflation run out of control gradually diminishes, which helps trigger a rebound in long-term U.S. Treasury bonds and other securities that benefit from deflationary pressures, such as High-rated corporate bonds, This U.S. dollar And many large technology stocks.

The 30-year U.S. Treasury yield fell to its lowest level since February. It was 2.07% on Friday, lower than the 2.21% before the Federal Reserve meeting. When prices rise, yields fall.

Guha said that the scale of the shift in the world’s largest bond market shows that investors are beginning to question the Federal Reserve’s commitment to its new and more flexible inflation targeting system. Since last year, the Fed has stated that it will keep inflation higher than its 2% target to balance the period of low inflation.

However, since the Fed meeting on Wednesday, market expectations for inflation have continued the recent decline. The 10-year US break-even point is a closely watched indicator of expectations for the next ten years. The trading price on Friday was 2.29%, lower than 2.39%.

Despite the Fed’s actions, some investors remain confident in reinflation transactions. Mark Dowding, chief investment officer of BlueBay Asset Management, said that the Fed’s plan to reduce asset purchases will eventually suppress bond prices and force yields higher, adding that the central bank has only responded to stronger-than-expected inflation data for two months in the past. It is not a fundamental change to its policy.

“The average inflation targeting system remains intact, as is the strong economic growth,” he said. “It’s frustrating, but as investors, this is one of the moments when we have to stand our ground.”