Impact of the Fed's interest rate hike on VSF market

On March 16, the Federal Reserve raised interest rates for the first time since the COVID-19 outbreak, rising from 0.25% to 0.5%, up 0.25 percentage points. The U.S. dollar is the universal currency in circulation and the Fed's interest rate hike has a profound impact on the global currency flow and economic changes, but this article only refers to the price trend of VSF when the Fed's interest rate changed in the past. It is noteworthy that the corresponding historical price is caused by a combination of factors, and cannot be simply considered to be the impact of the Fed's interest rate adjustment.

With reference to the changes in VSF prices and the Fed’s interest rates after the financial crisis, it can be seen that there is not strong correlation between the two. From November 2008 to December 2015, the interest rate had been low at 0.25%, while VSF witnessed the largest increase and decrease in history during this period.

After the Fed entered the interest rate hike cycle at the end of 2015, VSF price did not change much accordingly. However, there was a bullish market of VSF for almost three years in the context of supply-side reforms, printing money and destocking.

Of course, it can be seen that after the Fed continues to raise interest rates to a high level, there will be obviously negative impact on the market.

Overall, the impact of the Fed's interest rate hike on the global economy should not be underestimated, but to viscose industry, there is no need to be too sensitive. In the early stage, it is still necessary to pay attention to Chinese policies, market demand, and supporting facilities of the industrial chain. However, the Fed is expected to raise interest rates for 6-7 times this year, so it is still necessary to raise risk awareness in the later stage of interest rate hikes.