Summary of Key Points Core Viewpoint - The Federal Reserve is moving towards normalizing its monetary policy by potentially halting the reduction of its balance sheet and adjusting interest rates in response to economic conditions and inflation trends [1][2][3][4][5]. Interest Rate Adjustments - The Federal Reserve has outlined a series of interest rate cuts, with a reduction of 50 basis points on September 19, 2024, followed by two 25 basis point cuts in November and December, bringing the target rate down to 4.25%-4.50% by the end of 2024 [1]. - The anticipated path for interest rates includes further cuts in 2025, with projections indicating a potential target range of 3.75%-4.00% by October 2025 [1]. Balance Sheet Normalization - The Fed's balance sheet, which expanded significantly during the pandemic, is expected to stabilize as the central bank ceases the reduction of its securities holdings starting December 1, 2024 [3][4]. - Over the past three and a half years, the Fed has reduced its securities holdings by $2.2 trillion, decreasing the balance sheet's proportion of nominal GDP from 35% to approximately 21% [4]. Economic Indicators and Market Reactions - Recent data suggests that while the job market is cooling, inflation remains relatively high, prompting the Fed to adjust its policy stance [3][5]. - Market expectations shifted dramatically following the Fed's announcements, with the likelihood of maintaining rates at 3.75%-4.00% rising significantly, while the probability of further rate cuts dropped to zero [6]. Capital Market Responses - Following the Fed's rate cuts, the Hong Kong Monetary Authority and the Bank of Canada also announced similar reductions in their interest rates, indicating a synchronized approach to monetary policy adjustments [8]. - The U.S. stock market initially reacted positively to the Fed's announcements, with major indices experiencing fluctuations, while individual stocks like Nvidia and Apple saw significant market capitalization changes [13].

Core Viewpoint - The Federal Reserve's decision to cut interest rates by 25 basis points in October aligns with market expectations, but Chairman Powell's hawkish comments suggest that a December rate cut is not guaranteed, indicating a growing internal division within the Fed [1][2] Group 1: Federal Reserve's Actions and Statements - The Federal Reserve cut rates by 25 basis points in October, with two dissenting votes: one for a 50 basis point cut and another for no change, highlighting increasing internal disagreements [1] - Powell emphasized that a further reduction in December is not a foregone conclusion, indicating significant internal divisions among Fed officials regarding future actions [2] - The Fed's monetary policy statement showed little change from September, noting a slowdown in job growth and a rise in unemployment, while inflation remains elevated [1] Group 2: Economic Indicators and Implications - The labor market is slowing but not deteriorating rapidly, with indicators showing a gradual decline in job growth, suggesting that further rate cuts depend on worsening employment conditions [2] - Inflation remains significantly above the Fed's target, with the PCE inflation rate estimated at 2.8% in September, reflecting persistent upward pressure on prices [3] Group 3: Future Monetary Policy Outlook - The Fed has room for further policy easing, but the pace of rate cuts may slow, transitioning from "cutting at every meeting" to "quarterly cuts" as the policy rate approaches neutral levels [3] - The expected impact of rate cuts on the economy may be limited due to a weakened refinancing effect, as many homeowners locked in low rates previously, reducing the incentive for refinancing [4] Group 4: Quantitative Tightening and Asset Management - The Fed plans to end quantitative tightening (QT) on December 1, stopping the reduction of U.S. Treasury holdings while continuing to reinvest maturing securities [4][5] - This decision is seen as a technical adjustment to address liquidity concerns and manage the average duration of the Fed's asset portfolio, shifting from long-term MBS to short-term T-bills [5]

Core Insights - The current economic environment presents a challenging situation with inflation risks tilted to the upside and employment risks to the downside [1][2] - The Federal Reserve is adopting a balanced approach to address both maximum employment and stable prices, indicating a shift in the balance of risks [2][8] - The decision to cease the reduction of aggregate securities holdings reflects the Fed's assessment that the balance sheet has reached a standard consistent with ample reserve conditions [4][6] Monetary Policy Adjustments - The Federal Reserve plans to hold the size of its balance sheet steady while allowing agency securities to run off and reinvesting proceeds in Treasury bills [7] - The effective federal funds rate has begun to rise relative to the interest on reserve balances, indicating tightening conditions in money markets [5][6] - The Fed's balance sheet has shrunk by $2.2 trillion over three and a half years, reducing its share of nominal GDP from 35% to about 21% [6] Future Outlook - The upcoming December meeting will not necessarily lead to a further reduction in the policy rate, as differing views exist within the committee [4] - The Fed remains committed to achieving its dual mandate of maximum employment and stable prices, emphasizing the importance of these goals for all Americans [8][9] - The normalization of the balance sheet composition is a key focus, with efforts to align the weighted average maturity of the portfolio with that of outstanding Treasury securities [7]

高盛长线看多日元，认为随着日本货币政策逐步正常化，收益率曲线控制等超宽松政策工具告终，未来10年日元兑美元汇率可能升至100，逆转多年来的日元贬值趋势。虽然新任首相高市早苗的宽松立场和财政扩张计划被视为短期内对日元的负面因素，但高盛策略师预计，鉴于通胀的政治阻力日益增大，日元回归安倍经济学式政策的势头将“更加温和”。 ...

Core Viewpoint - The U.S. Treasury Secretary Janet Yellen urged Japan to adopt a "robust monetary policy" in light of Japan's slow pace of interest rate hikes, which has implications for currency stability and inflation expectations [1][3]. Group 1: U.S. and Japan Monetary Policy - Yellen emphasized the importance of formulating and communicating a robust monetary policy to stabilize inflation expectations and prevent excessive currency fluctuations [3]. - The meeting between Yellen and Japan's Finance Minister Shunichi Suzuki did not directly address Japan's monetary policy, indicating a nuanced diplomatic approach [4]. - Japan's central bank has raised interest rates twice since January but maintains borrowing costs at 0.5%, reflecting a cautious approach to monetary tightening [5]. Group 2: Economic Implications - Critics argue that the slow pace of interest rate hikes has led to a weaker yen, increasing import costs and overall inflation, which has become a political challenge for Japan [6]. - Japan's core inflation rate has exceeded the central bank's 2% target for over three years, raising concerns among policymakers about potential second-round price effects [7]. - The Japanese government appears optimistic about the benefits of a weaker yen, complicating the monetary policy landscape [7]. Group 3: Market Expectations and Predictions - Analysts suggest that Washington may be pursuing a weaker dollar policy to boost U.S. exports, thereby pressuring Japan to allow the yen to appreciate against the dollar [8]. - Market consensus indicates that the Bank of Japan's next interest rate hike may occur in December 2023 or January 2024, with a gradual approach to increasing rates [8]. - Goldman Sachs analysts predict that as Japan normalizes its monetary policy, the yen could appreciate to around 100 against the dollar over the next decade, reversing a long-term depreciation trend [8][9].

Core Insights - Goldman Sachs indicates that the phenomenon of the Japanese yen being "undervalued" will gradually diminish over the next decade as monetary policy normalizes [1] - The report suggests that the yen-to-dollar exchange rate may return to around 100, which is not as extreme as it seems compared to the forward pricing of 115-120 [1] - The new Prime Minister, Sanna Takashi, is expected to lead Japan back to "Abenomics," but the momentum may be more moderate due to political unpopularity of inflation [1] - Despite significant deviations of the dollar/yen exchange rate from fair value over the years, it is expected to revert to GSDEER fair value over time [1]

一项最新调查显示，多数经济学家预期日本央行将在四季度上调政策利率，主要受日元持续贬值带来的 输入性通胀压力驱动。 根据10月14日至20日开展的调查，在35位受访经济学家中，60%预计日本央行将在本季度（即10月或12 月）加息。从具体时点看，46%的受访者认为加息将发生在2026年1月，31%选择12月，14%预计为10 月。总体而言，约96%的经济学家预测，到2026年3月底，日本央行将至少加息25个基点，使短期政策 利率从当前的0.50%升至0.75%。（新华财经） 尽管新任首相高市早苗主张积极财政政策并可能对央行施加影响，但市场普遍认为这不会显著延缓货币 政策正常化进程。 ...

Group 1 - A recent survey indicates that the majority of economists expect the Bank of Japan to raise policy interest rates in the fourth quarter, driven by inflationary pressures from the continued depreciation of the yen [1][2] - Among 35 surveyed economists, 60% anticipate an interest rate hike within this quarter, with 46% predicting it will occur in January 2026, 31% in December, and 14% in October [1] - Approximately 96% of economists forecast that by the end of March 2026, the Bank of Japan will raise rates by at least 25 basis points, increasing the short-term policy rate from the current 0.50% to 0.75% [1] Group 2 - The weak yen is significantly raising import costs, becoming a key consideration for the Bank of Japan's shift towards tightening monetary policy [2] - Although domestic political changes and global economic uncertainties may affect decision-making, Japan's inflation remains above the central bank's 2% target, providing a basis for policy adjustments [2] - Continuous wage growth further supports the rationale for potential policy changes [2]

Market Overview - Japanese stock market opened lower, with the Nikkei 225 index dropping over 1% to 48,807.89, down 508.17 points or 1.03% [4][5] - SoftBank Group's stock fell more than 9%, marking its largest decline since August 2020 [5][6] - Japanese automotive stocks, including Toyota, Mazda, and Honda, saw gains of over 3% [6][7] Political Developments - Fumio Kishida was elected as Japan's 104th Prime Minister, becoming the first female Prime Minister in Japan's history. She is known for advocating expansionary fiscal policies and increased defense spending [7][8] Trade and Economic Data - Japan's exports increased for the first time in five months, rising by 4.2% year-on-year in September, driven by semiconductor and electronic component shipments. However, exports to the U.S. fell by 13.3% [8] - Japan recorded a trade deficit of 314 billion yen (approximately 2.1 billion USD) in September, with imports rising by 3.3% [8] Monetary Policy Outlook - Market expectations suggest that the Bank of Korea will maintain its policy rate unchanged for the third consecutive time, as policymakers await the impact of new real estate measures [10] - The pressure for normalization of Japan's monetary policy remains, with the CPI exceeding the 2% target for 37 consecutive months [8] Precious Metals Market - Gold and silver experienced significant declines, with gold briefly falling below $4,010 per ounce before rebounding, reflecting a drop of 1.82% [12][14] - The precious metals market is undergoing a broad liquidation due to profit-taking and reduced safe-haven flows, although long-term support remains due to macroeconomic factors [12][15]

Core Viewpoint - Multiple Wall Street analysts predict that the Federal Reserve may announce the end of its years-long balance sheet reduction plan at the upcoming meeting at the end of October [1][2][3] Group 1: Federal Reserve's Policy Shift - The anticipated policy shift is driven by recent market volatility, with several financial institutions unexpectedly utilizing the Fed's standing repo facility, leading to increases in key short-term borrowing rates [2][3] - Analysts believe that terminating the quantitative tightening (QT) policy could help ensure the smooth operation of monetary policy [1][2] - The Fed's core interest rate target, the federal funds rate, has been consistently rising within the 4%-4.25% target range [2] Group 2: Background of QT - The QT plan was initially designed to withdraw liquidity injected during the COVID-19 pandemic, where the Fed purchased large amounts of U.S. Treasuries and mortgage-backed securities to stabilize the economy [3][6] - The Fed's total asset holdings peaked at $9 trillion in the summer of 2022, more than doubling from previous levels, and have since been reduced to $6.6 trillion through a specific scale of bond maturities not being reinvested [3][6] Group 3: Market Conditions and Challenges - The Fed aims to maintain sufficient liquidity in the financial system to effectively manage short-term interest rates and respond to normal market fluctuations [6] - There are challenges in determining how much liquidity removal could lead to uncontrolled market volatility, making it difficult for Wall Street to predict the timing of QT's termination [6] - Current market volatility is driven by multiple factors, including tax payment dates and increased short-term Treasury issuance, with the ongoing QT process being a significant contributor [6]