Group 1 - The Jackson Hole Economic Symposium is an annual event held by the Kansas Federal Reserve in August, where central bank leaders announce adjustments or signals regarding monetary policy frameworks, particularly the Federal Reserve Chairman [2][10][11] - In recent years, Powell has made significant announcements at this event, including the average inflation targeting in 2020, reaffirming the temporary inflation view in 2021, and discussing the transition to a rate-cutting cycle in 2024 [2][11] Group 2 - Powell's speech this year emphasized the increasing risks of employment downturn, indicating that while the labor market appears balanced, it is a "strange balance" due to significant supply-demand slowdown, which could lead to increased layoffs and rising unemployment [3][13] - The likelihood of tariff price shocks evolving into sustained inflation seems unlikely, as current impacts are expected to be temporary and not lead to a "wage-price spiral" due to a less tight labor market [3][14] - Powell hinted at a potential rate cut in September, with the probability of a rate cut rising from 72% to 81.3% following his speech, indicating a shift in the Fed's assessment of inflation and employment risks [4][15][16] Group 3 - The adjustment of the Fed's monetary policy framework reflects changes in the macroeconomic environment, moving from an average inflation targeting to a flexible inflation targeting approach, allowing for more adaptability in response to economic conditions [5][21][24] - The removal of the "effective lower bound" statement indicates a recognition that the neutral interest rate may now be higher than in the 2010s, suggesting a shift in the Fed's approach to monetary policy [5][21] - The Fed's focus will now be on achieving a 2% inflation target in the medium term while retaining flexibility to respond to short-term economic developments [5][24]

Group 1: Monetary Policy Outlook - The Jackson Hole meeting indicated a shift towards a dovish stance, lowering the threshold for a rate cut in September[1] - Powell highlighted a significant slowdown in job growth, with an average of only 35,000 non-farm jobs added over the past three months, compared to 168,000 per month in 2024[1] - The current policy rate is between 4.25% and 4.5%, above the neutral rate of 3%, suggesting a need for adjustment in monetary policy[1] Group 2: Economic Indicators - The GDP growth rate for the first half of 2025 is only 1.2%, significantly lower than the 2.5% growth rate in 2024[1] - Powell noted that inflation risks from tariffs are likely to be one-time events rather than persistent, as the labor market is weak and long-term inflation expectations remain anchored[1] - The market currently prices in an expectation of 2.2 rate cuts for the year, which may be overly optimistic given the upcoming economic data releases[3] Group 3: Future Projections - In an optimistic scenario, the expectation is for rate cuts in September and December, with a total reduction of no more than 50 basis points for the year[5] - By May 2026, with a new Fed chair, the monetary policy is expected to become more accommodative, with projections of 4 to 6 rate cuts next year under different scenarios[5] - Following the September FOMC meeting, market expectations for rate cuts in 2026 are likely to increase, impacting the 2-year Treasury yield and the dollar index[5]

Group 1: Macroeconomic and Monetary Policy Stance - The policy tone has shifted to a "neutral dovish" stance compared to the July FOMC meeting, indicating a fragile balance in the labor market with rising risks of job losses [3][9][11] - Economic growth is slowing, with a real GDP growth rate of 1.2% in the first half of 2025, which is half of the 2024 rate, primarily due to a slowdown in consumer spending [10][11] - Inflation is influenced by tariffs, which are clearly visible but may be "one-time" effects, necessitating close monitoring of their transmission and accumulation [3][17][18] Group 2: Long-term Monetary Policy Framework Normalization - The long-term monetary policy framework has been revised to return to a 2% inflation target and a broad maximum employment goal, moving away from the average inflation targeting introduced in 2020 [4][22][25] - The 2025 statement serves as a retrospective confirmation of the Fed's monetary policy strategy, emphasizing the need to balance inflation and employment amid the current "stagflation" challenges [4][25][78] Group 3: Expectations and Risks of Fed Rate Cuts - The expectation for a rate cut in September has increased significantly, with implied probabilities rising from 72% to 94%, and the number of expected cuts for the year increasing from 1.9 to 2.2 [5][31][42] - The key to whether the September rate cut materializes lies not in Powell's statements but in the upcoming non-farm payroll report and inflation data [5][42][43] - The macroeconomic scenario for 2026 suggests persistent inflation and economic stabilization, but the pricing of three rate cuts may be overly optimistic, warranting caution regarding long-term bond yields and the dollar's reversal risk [5][53][60]

Group 1: Economic Outlook - Powell's speech indicates a shift to a "neutral dovish" stance, highlighting a "fragile balance" in the labor market with rising unemployment risks[2] - The U.S. economy's growth rate slowed to 1.2% in the first half of 2025, half of the 2024 rate, with average monthly job additions dropping to 35,000 from 168,000 in 2024[16] - Inflation concerns persist, with July PCE at 2.6% and core PCE at 2.9%, while tariff-induced inflation effects are evident but expected to be "one-time" adjustments[20] Group 2: Monetary Policy Framework - The Federal Reserve's long-term monetary policy framework has been revised to emphasize a 2% inflation target and broad maximum employment goals[3] - The 2025 statement reflects a return to a more traditional framework, moving away from the "average inflation targeting" introduced in 2020[24] - The Fed's dual mandate requires balancing inflation and employment risks, particularly in the context of "stagflation" challenges[3] Group 3: Interest Rate Expectations - Following Powell's remarks, the implied probability of a September rate cut surged from 72% to 94%, with expected cuts increasing from 1.9 to 2.2 times in 2025[4] - The market anticipates three rate cuts by the end of 2026, up from an earlier estimate of five[4] - The key to the September rate cut's realization hinges on the upcoming non-farm payroll report and inflation data[39]

Report Industry Investment Rating - The rating for the US dollar is "oscillation" [5] Core Viewpoints of the Report - Powell's unexpectedly dovish speech at the central bank annual meeting changed market expectations for the Fed's interest - rate cut rhythm. The Fed may accelerate the interest - rate cut in September, and the US dollar index will trend downward [33][34] - The geopolitical situation is evolving towards marginal easing, but the Russia - Ukraine negotiation is difficult to reach an agreement in the short term [2][11][13] - The Fed's internal differences are large, and the Trump administration's intervention in the Fed is increasing. Next year, the dovish lineup of the Fed will increase, and monetary policy will enter a new easing stage [2][11] Summary by Directory 1. Global Market Overview This Week - Market risk appetite remained high. Most global stock markets rose, and most bond yields declined. The yield of US Treasury bonds dropped to 4.25%. The US dollar index fell 0.14% to 97.7, and non - US currencies showed mixed performance. Gold prices rose 1.1% to $3371 per ounce, the VIX index dropped to 14.2, the spot commodity index closed down, and Brent crude oil rose 0.7% to $68.3 per barrel [1][5][9] 2. Market Trading Logic and Asset Performance 2.1 Stock Market - Most global stock markets rose. The S&P 500 index rose 0.27%, most European stock markets closed up, most emerging - market stock markets rose, the Shanghai Composite Index soared 3.49%, the Hong Kong Hang Seng Index rose 0.27%, and the Nikkei 225 index fell 1.72% [10][11] 2.2 Bond Market - Most global bond yields declined, with the 10 - year US Treasury yield dropping to 4.25%. Most euro - zone government bond yields declined, and emerging - market bond yields showed mixed performance. The yield curve of US Treasury bonds became steeper, and the yield of Japanese government bonds continued to rise. The 10 - year Chinese government bond yield rose to 1.787%, and the inversion of the China - US interest - rate spread decreased to 246bp [14][17][19][21] 2.3 Foreign Exchange Market - The US dollar index fell 0.14% to 97.7, and non - US currencies showed mixed performance. The offshore RMB rose 0.23%, the euro rose 0.13%, the pound fell 0.2%, the yen rose 0.17%, the Swiss franc rose 0.66%, and the Australian dollar, New Zealand dollar, real, and Thai baht depreciated, while the peso, Korean won, and rand appreciated [24][25][27] 2.4 Commodity Market - Spot gold rose 1.1% to $3371 per ounce, and Brent crude oil rose 0.7% to $68.3 per barrel. The VIX index dropped to 14.2, and the spot commodity index closed down. Gold prices are expected to continue to fluctuate, and oil prices are difficult to rise continuously [28][29] 3. Hot - Spot Tracking - Powell's speech at the central bank annual meeting was unexpectedly dovish. The Fed's policy focus may shift to the unemployment rate, and the US dollar index will trend downward [30][33][34] 4. Next Week's Important Event Reminders - Monday: US new home sales in July, UK market closed for one day - Tuesday: US housing price index in June, durable goods orders in July, and Conference Board consumer confidence index in August - Wednesday: Germany's Gfk consumer confidence index in September - Thursday: US initial jobless claims for the week, revised Q2 GDP, and ECB interest - rate meeting minutes - Friday: US core PCE in July [35]

Core Viewpoint - The report from CITIC Securities indicates that Powell's speech at the Jackson Hole central bank summit aligns with previous expectations, emphasizing the downside risks in the labor market and reiterating the view from the July meeting that "tariff inflation is transitory," paving the way for rate cuts in September [1] Monetary Policy - The Federal Reserve is expected to cut interest rates three times this year, each by 25 basis points [1] - The Fed has abandoned the average inflation targeting framework, returning to a flexible inflation targeting approach, and has modified its language to emphasize attention to "dual" labor market risks [1] Market Implications - Following Powell's dovish remarks, the main theme of "rate cut trades" in the U.S. stock market has been clarified, with a "catch-up" trading logic expected to dominate the upcoming market [1] - Similar to the "rate cut trades" in July 2024, sectors sensitive to interest rates such as Russell 2000, S&P 500 Real Estate, and Nasdaq Biotechnology may experience upward trends again [1] Currency and Bond Market - There remains a gap between market expectations for two rate cuts by the Fed and the company's forecast of three cuts, suggesting slight downward potential for U.S. Treasury yields and the dollar index [1] Global Equity Market - Powell's dovish comments and a weaker U.S. dollar are expected to boost risk appetite in global equity markets [1] Gold Market - The expectation of rate cuts is likely to support gold prices, although caution is advised regarding potential negative impacts from a possible agreement between Russia and Ukraine [1]

Group 1: Jackson Hole Conference Insights - The Jackson Hole Economic Symposium is an annual event held by the Kansas Federal Reserve, where central bank leaders discuss monetary policy adjustments[2] - Powell's recent speech indicated a shift towards a dovish stance, suggesting a potential interest rate cut in September due to increasing employment risks[3][11] Group 2: Economic Indicators and Risks - Employment risks are rising, with a peculiar balance in the labor market due to significant supply-demand slowdown, potentially leading to increased layoffs and unemployment[3][12] - The likelihood of tariffs causing sustained inflation is deemed low, with current price impacts expected to be temporary[3][12] Group 3: Interest Rate Projections - Following Powell's speech, the probability of a September rate cut increased from 72% to 81.3%, with the average expected cuts for the year rising from 1.91 to 2.18 times[4][14] - The current policy rate appears slightly ahead of estimated levels, indicating that any rate cuts may be more preventive rather than recession-driven[4][14] Group 4: Market Reactions and Framework Adjustments - In a preventive rate cut scenario, U.S. stock indices typically rise, supported by resilient earnings, while long-term U.S. Treasury yields are likely to decline[5][19] - The Fed is shifting from an average inflation targeting framework to a flexible inflation targeting approach, allowing for more adaptability in response to economic conditions[6][20][25]

Core Viewpoint - The Federal Reserve, under Powell's leadership, has shifted its monetary policy framework from "Flexible Average Inflation Targeting" (FAIT) to "Flexible Inflation Targeting" (FIT), reflecting the need to adapt to changing economic conditions and persistent inflation challenges [1][7][10] Group 1: Historical Context and Policy Evolution - In the 1970s, the U.S. faced high inflation rates, prompting then-Fed Chair Volcker to raise interest rates to 20%, which ultimately led to a significant GDP contraction [1] - Powell's initial response to the pandemic-induced inflation was slow, as he believed the inflation surge would be temporary, a view shared by many analysts at the time [2][3] - By mid-2021, it became clear that inflation was not temporary, leading to a shift in policy starting in November 2021, culminating in aggressive rate hikes beginning in March 2022 [2][6] Group 2: New Monetary Policy Framework - The new FIT framework emphasizes a 2% inflation target while allowing for proactive measures in response to inflation risks, moving away from the previous focus on employment shortfalls [7][8] - Key modifications in the new framework include the removal of commitments to overshoot inflation targets and a more flexible approach to policy adjustments based on real-time data [8][11] - The framework aims to enhance the Fed's responsiveness to inflationary pressures while acknowledging the complexities of the current economic landscape, including supply chain disruptions and geopolitical factors [3][5][10] Group 3: Legacy and Future Implications - Powell's tenure is marked by significant changes in the Fed's approach, including the modernization of its toolkit and the institutionalization of regular policy reviews [9][10] - The new framework is expected to lead to a world characterized by moderate inflation, higher neutral interest rates, and frequent supply shocks, with a stronger commitment to maintaining the 2% inflation target [10][11] - The effectiveness of the new monetary policy framework will be tested in the evolving economic environment, with Powell's legacy likely to be evaluated based on its long-term impact [11][12]

Core Viewpoint - Federal Reserve Chairman Jerome Powell's dovish remarks at the global central bank meeting indicate a potential shift in monetary policy, suggesting that if economic risks change, adjustments may be necessary. This has led to a market expectation of over 90% probability for a rate cut in September [2][3]. Summary by Sections Policy Shift Signal - Powell emphasized that the current policy rate is in a restrictive zone, providing room for potential rate cuts. He noted that the balance of risks regarding employment is shifting downward, indicating a fragile equilibrium in the labor market [5]. Inflation and Tariff Impact - Powell acknowledged that tariffs have raised prices for some goods, with the core PCE inflation rising 2.9% year-on-year in July. However, he views this as a one-time shock rather than a persistent inflation issue. He warned of two risks: prolonged tariff adjustments and the potential for inflation expectations to become unanchored, leading to a wage-price spiral [5]. Economic Data Weakness - U.S. GDP growth is projected to slow to 1.2% in the first half of 2025, down from 2.5% in 2024, with consumer spending significantly weakening. Non-farm payroll growth dropped to an average of 35,000 in July, down from 168,000 previously. Although the unemployment rate remains low at 4.2%, the risk of layoffs is increasing [5]. Monetary Policy Framework Adjustment - The Fed has abandoned the average inflation targeting framework established in 2020, returning to a flexible inflation target approach. This new framework emphasizes a balanced dual mandate of employment and inflation, with no preset policy path, relying entirely on data [5]. Beneficial Assets from Rate Cuts - A potential rate cut by the Fed is expected to benefit several asset classes: - **Equities**: Particularly technology and growth stocks, which are sensitive to interest rates, such as Tesla and Nvidia. The expectation of rate cuts may also lead to increased capital inflows into A-shares and Hong Kong stocks [7]. - **Precious Metals**: Gold and other metals are likely to rise as a lower dollar index boosts their prices. This includes commodities like copper and aluminum, which have both industrial and monetary attributes [7]. - **Cryptocurrencies**: Bitcoin and Ethereum are anticipated to experience upward trends due to increased liquidity and heightened risk appetite among investors [7].

Core Viewpoint - The Federal Reserve is likely to initiate interest rate cuts soon due to rising downside risks to employment and diminished upside risks to inflation, as indicated by Powell during the Jackson Hole meeting [2][3]. Employment and Inflation - Employment growth is slowing, indicating a decrease in job creation opportunities, while GDP growth has also decelerated in the first half of the year, leading to increased downside risks for employment [2]. - Inflation is approaching the Fed's target, with tariffs expected to have a gradual and uncertain impact on prices. There is a lack of sustained upward pressure on inflation due to downward pressure in the labor market, which reduces the likelihood of a wage-inflation spiral [3]. Monetary Policy Framework Changes - The Fed has revised its monetary policy framework to return to a flexible inflation targeting regime, allowing for adjustments without waiting for inflation to remain below 2% for an extended period. This change acknowledges the weakening labor supply and demand [6][7]. - The new framework removes references to the effective lower bound as a decisive economic characteristic, reflecting the current low interest rate environment and the potential for more frequent constraints on the federal funds rate [6]. - The Fed has shifted its view on maximum employment, now considering it as the highest level of employment that can be sustained in a context of price stability, rather than focusing on employment shortfalls [7]. Long-term Inflation and Employment Goals - The Fed maintains that a 2% inflation rate, measured by the Personal Consumption Expenditures Price Index, is most consistent with its dual mandate of promoting maximum employment and price stability. Long-term inflation expectations should remain anchored at this level to enhance the Fed's ability to achieve maximum employment [8]. - The Fed's approach to monetary policy will balance the degree of deviation from its employment and inflation targets, considering the time required for both to return to target levels [8].