Viewpoint: Beware of the "Buy the Rumor, Sell the News" Effect as the New Fed Chair Takes Office, Uncertainty Set to Peak from July to November

**December 29** — Nomura Securities warned Wednesday that the new Federal Reserve chair, set to take office in May 2024, may lead a rate cut in June. But with the U.S. economy recovering, internal opposition to further rate cuts could emerge within the Fed. Policy disagreements would not only erode market confidence in the new chair but also spark tension between the Fed and the Trump administration. If the Fed holds rates steady after its June meeting, friction with Trump—who is pushing for deeper cuts to boost midterm election prospects—will be unavoidable. Nomura expects uncertainty to intensify from July to November 2024. During this period, a "flight from U.S. assets" trend may take hold, driving down U.S. Treasury yields, triggering a stock market pullback, and weakening the dollar. Investors should watch for potential liquidity reversals. Major global economies may also pause rate cuts or even start hiking, diminishing the relative appeal of holding dollar assets. A policy deadlock, combined with bottoming inflation and signals the Fed is ending its rate-cut cycle, will exacerbate market volatility.