Core Viewpoint - The Federal Reserve's interest rate cut cycle is expected to transition through three phases: "fast-slow-fast," with significant implications for both domestic and international economic operations and asset performance [2][4][6]. Phase Summaries - Phase 1 (2025Q4): Rapid rate cuts are anticipated due to the recent confirmation of rising inflation, with a focus on stabilizing growth over controlling inflation. The Fed may implement 3-4 consecutive rate cuts [2][4]. - Phase 2 (2026H1): The pace of rate cuts is expected to slow as inflation continues to rise, necessitating a balance between growth and inflation risks. The Fed may halt balance sheet reduction to soothe financial markets [4][6]. - Phase 3 (2026H2): Rate cuts may accelerate again, particularly with a potential change in Fed leadership towards a more dovish stance, and the impact of tariffs on inflation may diminish [4][6]. Economic Outlook - The U.S. economy is currently trending towards stagflation (declining growth with rising inflation), with a higher likelihood of stagflation than recession. However, a policy-driven recovery is anticipated at some point [8][10]. - A new market scenario of overheating (rising growth and inflation) could emerge if growth turns upward during inflationary periods [10][12]. Historical Context - An analysis of past Fed rate cut cycles indicates that the average time from the initiation of rate cuts to the growth upturn is approximately 12 months. The current cycle began in September 2024, suggesting a potential growth turning point is near [12][13]. - Key economic indicators follow a specific sequence during recovery phases, with housing data being a leading indicator, while employment data tends to lag behind growth indicators [13][14]. Market Implications - The current macroeconomic environment is conducive to a "loose trading" strategy, particularly in the context of U.S.-China liquidity resonance, which is expected to benefit various asset classes [17][18]. - October is projected to remain a favorable period for liquidity, with a continued focus on equities, particularly in China, as the market is expected to maintain a relatively high risk appetite [23][26]. Asset Allocation Recommendations - The company recommends an overweight position in A-shares, Hong Kong stocks, and gold, while maintaining a standard allocation in U.S. and Chinese bonds. The focus should be on sectors with lower valuations and higher technological content, such as the ChiNext and Hang Seng Tech [23][26]. - Given the anticipated dollar depreciation, various asset classes, including stocks, bonds, gold, and commodities, are expected to perform well [23][26].
中金：美联储降息周期中的经济与市场前景