The US economy faces a stagflation dilemma, and global Capital Market fluctuations are intensifying.

Recent economic data from the United States shows signs of stagflation, raising concerns in the market. The GDP growth rate in the first quarter was only 1.6%, significantly lower than expected; meanwhile, the core PCE price index rose unexpectedly by 3.7%, indicating that inflationary pressures remain severe. This stands in stark contrast to the optimistic "Goldilocks" economic expectations prevalent in the market at the beginning of the year.

In the face of persistently high inflation, the Federal Reserve may delay the timing of interest rate cuts and reduce the magnitude of those cuts. However, the likelihood of continuing to raise interest rates is relatively low. In the future, as factors such as stabilizing commodity prices and rebalancing in the labor market come into play, core inflation is expected to decline. Currently, Federal Reserve officials are generally dovish, suggesting that the U.S. still has policy space to address inflation.

Geopolitical conflicts are another important factor in this month's Capital Market Fluctuation. However, major powers are maintaining restraint, and the likelihood of a large-scale conflict is very small. The impact of geopolitics on financial markets is often short-term.

After experiencing a "crazy bull" market for 5 months, the US stock market has undergone a significant adjustment, with the Nasdaq index briefly falling to the 120-day moving average. This mainly reflects changes in interest rate cut expectations, putting pressure on the valuations of tech stocks. A certain investment bank has downgraded the ratings of six major tech stocks, believing that their profit momentum is facing a cooling down.

The Japanese stock market has also experienced a significant correction, mainly influenced by the depreciation of the yen and the strengthening of the dollar. However, other markets such as Europe and India have performed relatively steadily, showing no signs of systemic risk for now.

The cryptocurrency market has been sluggish this month, with Bitcoin temporarily dropping below $60,000. Currently, the crypto market shows a high correlation with traditional asset movements, particularly resembling the stock price trends of a certain tech giant. This reflects that Bitcoin may have been bound to US ETFs, deviating from its decentralized nature.

However, Hong Kong has recently officially approved 6 virtual asset spot ETFs, including 3 Bitcoin ETFs and 3 Ethereum ETFs. This is expected to bring about $1 billion in incremental funds to the crypto market. Australia also plans to launch a Bitcoin ETF by the end of the year. The listing of ETFs in various places is expected to uphold the decentralization of Bitcoin's secondary market pricing power, returning it to the intrinsic value of electronic gold.

Overall, despite the economic challenges faced by the United States, the global financial markets have not yet shown widespread signs of crisis. Asian markets such as Hong Kong's innovative initiatives in the cryptocurrency sector may become new growth points for the global Capital Market, driving the cryptocurrency market towards maturity and regulation.