Core Insights - The Federal Reserve is signaling a potential early end to its quantitative tightening (QT) policy, with Chairman Powell indicating that the reduction of the balance sheet may stop when reserves are slightly above what is deemed sufficient [1][2] - Analysts suggest a clear policy roadmap: interest rate cuts are currently happening, followed by the cessation of QT, and potentially a new round of quantitative easing (QE) starting in early 2026 [1][2] Economic Pressures - The U.S. job market is showing signs of distress, with companies announcing 946,426 layoffs this year, a 55% increase compared to the same period in 2024, marking the highest level since 2020 [2] - The housing market is under significant pressure, with searches for "mortgage assistance" reaching their highest level since the 2008 financial crisis, and current mortgage rates at approximately 6.3%, more than double the 3% rates locked in by many homeowners during 2020-2021 [2] Balance Sheet Status - The Federal Reserve's balance sheet remains far from normal levels, currently at $6.6 trillion, down only $2.2 trillion since the start of QT in June 2022, which is only a 27% reduction from pre-pandemic levels of about $4 trillion [3][6] - Powell's comments suggest a new "normal" for the balance sheet, which is 60% higher than pre-pandemic levels, indicating a shift in expectations for future monetary policy [6] QE Implications - The potential restart of QE from a high balance sheet level of $6.6 trillion, rather than a more normalized $4 trillion, could lead to double-digit inflation, as the system is still saturated with liquidity from the pandemic [7] - Investors may need to prepare for high inflation and new asset price volatility as the Fed's monetary expansion resumes [7]

Core Viewpoint - The Federal Reserve is expected to announce a 25 basis point rate cut during its October meeting, lowering the federal funds rate target range to 3.75%-4% with a 99.9% probability according to market expectations [1][3][4] Group 1: Rate Cut Expectations - The market anticipates a rate cut, but there are internal divisions within the Federal Reserve regarding future monetary policy direction due to a lack of economic data caused by the government shutdown [3][4] - Analysts expect that the Fed will provide more guidance on future policy directions during the press conference, particularly regarding employment risks and inflation pressures [4][8] Group 2: Economic Data and Labor Market - Recent private sector data indicates a decline in private sector jobs, with ADP reporting a loss of 32,000 jobs in September, reflecting a weakening labor market [4][8] - Despite acknowledging risks in the labor market, some Fed officials express concerns about inflation, with the core CPI rising 3% year-on-year, exceeding the Fed's target by one percentage point [4][9] Group 3: Balance Sheet and Quantitative Tightening - There is speculation that the Fed may announce an end to its balance sheet reduction (quantitative tightening) during this meeting, as recent trends show a decline in bank reserves [10][13] - Major banks like JPMorgan and Bank of America have adjusted their forecasts, suggesting that the Fed may halt its asset reduction process due to rising borrowing costs in the dollar financing market [10][15]

Core Viewpoint - The Federal Reserve is set to conclude its quantitative tightening program, marking the end of large-scale financial market interventions initiated in March 2020 due to the COVID-19 pandemic. The Fed aims for the market to operate independently while returning to traditional interest rate tools to stimulate or cool the economy [5][6]. Summary by Sections Quantitative Easing and Tightening - To counter the economic impact of the pandemic, the Federal Reserve implemented quantitative easing, purchasing trillions of dollars in securities to maintain low long-term interest rates, which expanded its balance sheet to nearly $9 trillion. Since 2022, the Fed has reversed these measures through quantitative tightening, reducing its balance sheet by $2.2 trillion [6]. Bank Reserves and Economic Signals - The Fed intends to reduce bank reserves from "ample" to "adequate," but determining the end point for quantitative tightening remains challenging. Currently, bank reserves account for about 10% of nominal GDP. The Fed is cautious to avoid a repeat of the 2007-2009 financial crisis, where a significant drop in bank reserves led to market volatility [7]. Market Reactions and Future Expectations - Experts suggest that the end of quantitative tightening may be interpreted by the market as a sign of the Fed's intention to boost the economy. Some traders might view this as another economic stimulus measure [7][8]. Concerns Over Liquidity - There are warnings that the current state of the money market indicates the Fed may be repeating past mistakes of excessive liquidity withdrawal. Some analysts argue that the Fed has allowed too much reserve to dissipate and should resume purchasing Treasury securities to replenish market liquidity [8]. Future Monetary Policy - The Fed has indicated that it does not currently see the need to increase its securities purchases, with predictions that it will not expand its balance sheet before the end of 2026. However, it will monitor year-end financing costs closely to respond to market pressures if necessary [8][9]. Caution in Future Interventions - The Fed's experience with previous rounds of bond purchases has made it more cautious about using quantitative easing as a monetary policy tool. Critics argue that such interventions leave a significant footprint in financial markets. The Fed is unlikely to face a situation requiring a return to quantitative easing in the foreseeable future, as current economic conditions are more likely to present inflationary pressures rather than deflationary ones [9].

Core Points - The Federal Open Market Committee (FOMC) is expected to conclude its meeting on October 29, 2025, with a press conference by Chairman Powell at 2:30 PM ET [1] - Traders and economists are highly confident that the Federal Reserve will lower interest rates to a range of 3.75-4.00%, with a 98% probability of a 25 basis point cut [1][3] - The focus will shift to the Fed's monetary policy statement and Powell's press conference to gauge potential market changes following the expected rate cut [3] Interest Rate Expectations - The market anticipates a gradual decline in U.S. interest rates, with a 95% confidence level for another 25 basis point cut in December [3] - The FOMC's path for the remainder of the year appears set unless unexpected circumstances arise [3] - The expected rate cut may not significantly support the economy due to challenges from immigration and AI replacing human labor [3][4] Quantitative Tightening (QT) - A key point of interest in the upcoming FOMC meeting is whether the Fed will announce an end to its QT program, which involves allowing certain debt holdings to mature and reducing the balance sheet [5] - Ending QT could be perceived as a stimulus to the economy, potentially boosting risk-sensitive assets like equities and high-yield currencies while negatively impacting bonds and the dollar [6] Economic Commentary - Fed officials express caution regarding further rate cuts, indicating limited space for additional easing unless there is a deliberate shift towards inappropriate loosening [8] - Concerns about inflation and inflation expectations are highlighted by various Fed officials, suggesting a careful approach to policy adjustments [8] Currency Market Analysis - The USD/JPY currency pair is seen as a pure reflection of U.S. economic trends, with recent price action indicating a potential downward movement towards the 150.00 support level [9] - Any unexpected actions from the FOMC or the Bank of Japan could invalidate current technical strategies [9]

Core Viewpoint - The Federal Reserve is expected to announce a 25 basis point rate cut during its October meeting, lowering the federal funds rate target range to 3.75%-4% with a 99.9% probability according to market expectations [1][3] Group 1: Rate Cut Expectations - The market anticipates a second consecutive rate cut, but there are internal divisions within the Fed regarding future monetary policy direction due to a lack of economic data caused by the government shutdown [3][4] - The ADP report indicated a decrease of 32,000 private sector jobs in September, reflecting a potentially worsening labor market [3][4] Group 2: Inflation Concerns - Despite acknowledging risks in the labor market, some Fed officials express concerns about inflation, with the core CPI rising 3% year-over-year, exceeding the Fed's target by one percentage point [4][6] - There is a significant divide among Fed officials, with some advocating for immediate rate cuts while others prefer a more cautious approach [4][6] Group 3: Economic Data Challenges - The government shutdown has led to a lack of critical economic data, complicating the Fed's ability to assess the current economic situation [7][8] - Analysts expect the Fed to communicate increased uncertainty regarding future policy paths due to the absence of comprehensive economic indicators [8] Group 4: Balance Sheet Reduction - There is speculation that the Fed may announce an end to its balance sheet reduction (quantitative tightening) during this meeting, as recent market conditions suggest a need for increased liquidity [9][12] - The Fed's decision on whether to continue reducing its balance sheet will depend on the state of bank reserves, which have recently fallen below $3 trillion [9][12] Group 5: Market Reactions - Recent large trades in the interest rate market indicate positioning for the Fed's potential announcement to end quantitative tightening, reflecting market expectations for a rate cut and a shift in policy [12][13] - The SOFR (Secured Overnight Financing Rate) currently stands at 4.24%, while the federal funds rate is at 4.11%, suggesting market adjustments in anticipation of the Fed's decisions [13]

Group 1 - The core viewpoint is that the potential cessation of the Federal Reserve's Quantitative Tightening (QT) could enhance global liquidity and provide significant support for risk assets [1][2][3] - The market is increasingly anticipating an announcement from the Federal Reserve to end its balance sheet reduction process during the upcoming FOMC meeting, driven by signals of stress in key financing markets and recent comments from Fed officials [1][2] - Ending QT would eliminate a persistent liquidity headwind, potentially alleviating pressures in the money market that have led to rising financing costs and establishing a foundation for the rebound of various risk assets [1][2] Group 2 - The urgency to end QT is growing as the balance in the Federal Reserve's overnight reverse repurchase agreement (RRP) tool diminishes, weakening a crucial "shock absorber" function in the financial system and causing increased financing costs and interest rate volatility [2] - Current repo rates have risen above the excess reserve interest rate (IORB) and may even exceed the upper limit of the Federal Funds target range, forcing market participants to rely more on the Fed's standing repo facility (SRF) [2] - Stopping QT would halt the ongoing outflow of bank reserves and signal the beginning of rebuilding systemic liquidity buffers, which is essential for maintaining normal operations in the repo market and stabilizing short-term interest rates [2][3] Group 3 - Ending QT would send a clear signal to the market that the Federal Reserve prioritizes maintaining policy control and market stability over further reducing its balance sheet [3] - This move is significant for the U.S. Treasury market, as it would alleviate the pressure of collateral excess and enable existing reserves to finance the market more effectively, improving market depth and reducing reliance on the Fed as a backstop [3] - A more stable U.S. financing environment would have widespread spillover effects, helping to ease dollar scarcity, relax global financial conditions, and support a broad recovery in risk appetite across asset classes [3]

Core Viewpoint - The Federal Reserve is expected to approve a 25 basis point rate cut in its upcoming FOMC meeting, with discussions on future rate paths and the timing of ending the balance sheet reduction plan highlighting internal divisions among policymakers [1][2]. Group 1: Rate Cut Expectations - The likelihood of a 25 basis point rate cut is nearly 100% as the current overnight loan benchmark rate is between 4% and 4.25% [1]. - Economists predict that the Fed will continue to cut rates into 2026, potentially lowering rates to a neutral range of 2.75% to 3% [3]. Group 2: Internal Divisions - There are significant divisions among Fed officials regarding the timing and extent of future rate cuts, with some advocating for immediate action while others are hesitant [2]. - The recent voting dynamics show that only one member opposed the last rate cut, indicating a split in opinions on the committee [2]. Group 3: Labor Market Concerns - Concerns about the labor market are a primary reason for the Fed's inclination to cut rates, despite inflation remaining above the 2% target [3][4]. - The lack of recent economic data due to the government shutdown complicates the Fed's ability to make informed decisions regarding employment and inflation [4][5]. Group 4: Balance Sheet Management - The Fed is expected to signal the nearing end of its quantitative tightening process, which involves allowing maturing securities to roll off its $6.6 trillion balance sheet without reinvestment [5]. - There are indications of liquidity tightening, prompting expectations for a statement regarding the conclusion of the balance sheet reduction [5].

智通财经APP获悉，市场对本周美联储政策会议的两件事有普遍的预期——政策制定者们将决定把利率 下调25个基点;鲍威尔则可能不会提供太多前瞻指引，因为决策者之间日益扩大的分歧令未来政策路径 变得模糊不清。 一些美联储官员还指出，经济中某些板块(如服务业)的价格涨幅依然顽固地偏高，而这些领域理应较少 受到关税影响。此外，美国最近对中国和加拿大加征新关税的威胁，为物价走势和经济前景增添了新的 不确定性。因此，FOMC内部的分歧可能比9月份更为严重。当时，9位委员支持今年最多再降息一次。 在这种背景下，分析师预计鲍威尔将避免对未来几次会议的政策路径做出明确指引。由于政府停摆导致 官方经济数据缺失，他将更为谨慎。德意志银行美国首席经济学家Matthew Luzzetti表示："希望未来公 布的数据能帮助弥合两派之间的分歧。"但他补充称，只要分歧仍在，鲍威尔就会对"12月及之后的会议 发出极少信号"。 美联储理事米兰(Stephen Miran)已表示将再次投票反对主流意见，支持降息50个基点。而在其余投票成 员中，堪萨斯城联储主席施密德(Jeff Schmid)可能成为支持维持利率不变的潜在异议者。 美联储观察人士还认 ...

Group 1 - The International Monetary Fund (IMF) predicts that the U.S. government debt-to-GDP ratio will reach 143.4% by 2030, surpassing Italy and Greece for the first time this century [1] - The IMF also forecasts that the U.S. budget deficit will exceed 7% of GDP annually, the highest among all wealthy countries monitored by the fund this year and throughout the decade [1] - Despite the U.S. having a higher borrowing capacity due to the dollar being the global reserve currency, there is a shift in sentiment among U.S. politicians and investors regarding Europe's economic challenges as new data emerges [1] Group 2 - The end of quantitative tightening (QE) by the Federal Reserve may provide a smoother short-term debt financing strategy for the U.S. Treasury, potentially aligning the Fed's balance sheet with Treasury actions [3] - The focus will shift to the composition of the Fed's future balance sheet, with discussions on reducing the proportion of long-term bonds [3] - This change may open up the possibility for the Fed to purchase short-term securities, raising questions about the independence of the central bank [3]

美联储将于美东时间周三下午公布利率决定，普遍预计降息25基点，华尔街预计该央行将宣布结束量化 紧缩。 ...