01. Sweden's Central Bank Raises Interest Rates by a Substantial 100 Basis Points

This week can be dubbed a "super central bank week," as numerous central banks are set to announce their latest interest rates within this timeframe.

Kicking things off is the Riksbank of Sweden, which yesterday declared a 100 basis point increase in the benchmark interest rate, from the previous 0.75% to 1.75%, a move that significantly exceeded market expectations.

For the Riksbank, this marks its most hawkish stance in 30 years, as the last time it raised rates by 100 basis points was at the end of 1992.

The chart above illustrates the changes in Sweden's interest rates over the years.

Since 2015, the Riksbank has maintained an ultra-low interest rate policy, close to or even below 0%, which has rapidly increased in recent months.

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Of course, among developed countries, Sweden is not the first to raise interest rates by 100 basis points. In July of this year, Canada took the lead by raising rates by 100 basis points.

The most critical basis for the Riksbank's 100 basis point rate hike this time is the inflation rate, which rose to 9% in August, continuously setting a new 30-year high. Due to the persistently rising inflation, the Riksbank now forecasts that it will not be until 2024 that inflation will gradually回落 to around 2%. Concurrently, Sweden's GDP is predicted to contract by 0.7% next year, with market forecasts suggesting that the Riksbank will raise rates by another 75 basis points over the next year.

02.

The market is now awaiting the decision from the Federal Reserve, wondering whether it will also announce a 100 basis point rate hike in the deep night of today.After the United States released the latest CPI data last week, the probability of a 100 basis point interest rate hike immediately increased to 35%. However, the PPI data subsequently released was slightly in line with market expectations, and the news was gradually digested over the following days. It is currently believed that the probability of the Federal Reserve raising interest rates by 100 basis points has dropped below 20%.

However, before the Federal Reserve has announced the extent of the interest rate hike in September, many investment banks have already begun to predict how much the Federal Reserve will raise interest rates in November. This indicates that in the next six months, the Federal Reserve will still have multiple interest rate hikes.

But more and more people are realizing that the Federal Reserve's interest rate hikes are not only for controlling inflation. Perhaps another more important purpose is to continuously raise the US dollar index through interest rate hikes, causing a significant devaluation of other countries' exchange rates, and then carry out financial harvesting.

At present, the interest rate in the United States has been increased by 225 basis points, but it seems that the goal of American financial capitalists has not yet been achieved.

But if the Federal Reserve continues to raise interest rates, reaching 4% or even 4.5% by the middle of next year, then more and more countries will experience capital flight due to currency collapse.

This is also one of the reasons why many countries have chosen to continuously sell US Treasury bonds this year.

The latest data released by the US Department of the Treasury shows the holding situation of US Treasury bonds in July this year.

In July, the yield on the US 10-year Treasury bond showed a downward trend. The yield at the beginning of the month was 2.9%, and by the end of the month, it dropped to 2.64%, indicating a continuous inflow of funds into US Treasury bonds.

However, countries such as Japan, Switzerland, Ireland, and Belgium all reduced their holdings of US Treasury bonds to varying degrees during the month, and the main buyers of US Treasury bonds were individual investors.

In any investment market, when institutions leave and individual retail investors enter, the crisis is getting closer and closer.To prevent excessive currency devaluation, an increasing number of central banks are being forced to follow suit with interest rate hikes. In addition to Sweden and the United States, this week, ten central banks, including those of the UK and Japan, will also announce their latest interest rates in succession. It is believed that most central banks will further raise interest rates on the original basis.

The UK central bank's interest rate hike is very likely to be 75 basis points, which will also become the largest interest rate hike by the UK central bank since 1989. However, the year-on-year growth rate of the UK's CPI has slightly declined, with the CPI in August at 9.9% and the CPI in July at 10.1%.

For the time being, this year, the UK's stock market performance is the best among many major stock markets.