What Would Change My Mind?

In May, I warned that rate hikes could return in September. The Fed has now raised its target range to 3.75–4.00%, supporting that part of the argument. But getting the direction of rates right does not settle the timing of a stock-market correction or a property bottom. As the fourth quarter approaches, the question is when higher financing costs will reach asset prices, and how much pressure they will bring. The most likely individual rate range in the current market pricing for June 2027 is 4.75–5.00%, although its probability is only around a third. That is far from certain. If it materialises, however, the window for a Hong Kong property low outlined in July may need to move later.

For US equities, a 10–20% correction in the fourth quarter or by early 2027 remains the expected scenario. That window is only beginning; the market’s strength beforehand does not invalidate it. Previous midterm years offer context, but they cannot guarantee a sell-off. If the correction has not arrived by the end of March, I will accept that this cycle call failed rather than extend the deadline. Hong Kong property needs a separate assessment: whether sales can hold up without deeper discounts, whether inventory falls, and whether rental returns can attract investment buyers again. US stocks can remain strong while Hong Kong property struggles. Equally, a Wall Street sell-off would not tell us when local property has reached its bottom.

What would change the rate view? The clearest warning would be sustained weakness in US employment: rising unemployment alongside weekly initial jobless claims consistently reaching 250,000–300,000. One bad week would not be enough. Several indicators deteriorating together would carry more weight. These are warning levels, not official Fed triggers, and rate cuts can arrive before a recession. But the reason for those cuts matters. If orders, employment and incomes are weakening together, cheaper borrowing may not immediately bring property buyers back. Hong Kong needs evidence that buyers still have the means and confidence to act when financing pressure eases. For now, the higher-for-longer view remains intact, while the property-bottom timetable may need adjusting. The fourth quarter will begin to show whether the data follow the forecast.

Nothing here is investment advice.