Tom Lee: Expects Fed to Hold Rates Steady This Time, or Resume Quantitative Tightening

July 29th, Tom Lee posted on X Platform, stating that today's FOMC meeting is expected to keep the interest rate unchanged. The team compiled the comments and stances of the 12 voting members since the June meeting, including 3 hawks, 2 doves, and Warsh, who holds a neutral stance.

On the other hand, the FOMC meeting may announce the resumption of QT (quantitative tightening). The current monthly balance sheet reduction rate is zero. This move is equivalent to a stealth rate hike but does not initiate a tightening policy, and the uncertainty of the new Fed may bring back market visibility after the statement.

Therefore, Tom Lee believes that the stock market may perform better after the FOMC meeting, especially for AI bottleneck stocks such as Micron, which has dropped 41% from its peak. The forward P/E ratio has dropped to 5.372 times, below the 10-year average of 6.524 times, indicating a significant valuation discount.