Core Viewpoint - The market anticipates that the Federal Reserve may announce the end of quantitative tightening (QT) during the upcoming FOMC meeting, with Bank of America suggesting that the Fed might need to increase liquidity through the purchase of government bonds or by initiating Term Open Market Operations (TOMO) to alleviate pressures in the money market [1][4]. Group 1: Federal Reserve Actions - Bank of America expects the Federal Reserve to announce the cessation of QT at the October FOMC meeting and to initiate a plan to reinvest in government bonds using proceeds from maturing agency mortgage-backed securities (MBS) [4]. - The anticipated TOMO operations will involve overnight and term repurchase agreements, with rates set above the interest on excess reserves (IOR) by 5 and 10 basis points, respectively, and a scale of $500 billion [6][7]. Group 2: Market Implications - The TOMO operations are expected to limit the upward movement of the Secured Overnight Financing Rate (SOFR) and the General Collateral Rate (TGCR), thereby widening the spread between SOFR and the federal funds rate [7]. - Risk assets may interpret TOMO or Permanent Open Market Operations (POMO) as signals of financial easing and a resurgence in risk appetite, leading to recommendations for investors to maintain long positions in the SOFR/federal funds rate spread [7]. Group 3: Historical Context - The current expectations for TOMO operations draw parallels to the Fed's actions in 2019, where similar measures were taken in response to volatility in the repo market [6]. - The distinction between TOMO and the Standing Repo Facility (SRF) is highlighted, with TOMO being limited to primary dealers, which may reduce the stigma associated with using the SRF [6].

Group 1: Federal Reserve's Interest Rate Decision - The Federal Reserve is expected to lower the benchmark interest rate by 25 basis points to a range of 3.75%-4.00% during the FOMC meeting on October 28-29, 2023, due to a slowing U.S. job market and moderate inflation impact from tariffs [1][2] - Market expectations for a rate cut have intensified, with a 99.9% probability for a 25 basis point cut in October and a 91% probability for another cut in December, following lower-than-expected CPI data [2][3] - Analysts indicate that the Fed's statement will significantly influence market trends, with a dovish tone likely to weaken the dollar and benefit gold and global equities [1][8] Group 2: Labor Market and Economic Indicators - The U.S. labor market is showing signs of slowing down, with broad employment indicators indicating a deceleration, although there are no widespread layoffs or spending cuts reported [3][4] - The uncertainty surrounding the labor market remains a critical concern for the Fed, as the official employment data is currently in a "data vacuum" period [2][4] - Analysts express differing views within the Fed regarding the pace and extent of future rate cuts, reflecting varying assessments of economic risks [3][4] Group 3: Quantitative Tightening (QT) and Liquidity Concerns - There is speculation that the Fed may end its quantitative tightening (QT) policy soon, as liquidity pressures in the financial system are becoming evident [6][7] - Recent data shows a significant reduction in bank reserves, indicating that the current QT may be reaching a turning point [6][7] - Analysts suggest that the Fed's decision to halt QT could be a risk-minimizing choice in light of recent liquidity stress signals [6][7] Group 4: Market Reactions and Asset Performance - The market has already priced in the Fed's expected rate cuts, which is affecting the performance of various asset classes [8] - The dollar index is currently fluctuating between 98-99, facing downward pressure due to uncertainties related to tariffs and government shutdowns [8][9] - Analysts predict that gold and other precious metals will remain strong due to the anticipated Fed rate cuts and ongoing geopolitical factors [9][10]

Core Viewpoint - There is a growing expectation on Wall Street that the Federal Reserve will soon end its balance sheet reduction process, with some analysts predicting a potential restart of balance sheet expansion in the near term [1][4]. Group 1: Federal Reserve's Policy Meeting Expectations - Economists are calling for the Federal Reserve to announce the termination of quantitative tightening (QT) at the upcoming two-day policy meeting, with a general market expectation for a 25 basis point cut in the benchmark interest rate to a range of 3.75%-4.00% [1][4]. - The unexpected and sometimes severe rise in money market rates is a core reason for analysts urging the central bank to end the balance sheet reduction [1][4]. - The use of the Standing Repo Facility indicates that previously ample liquidity in the money market is tightening, further shifting expectations [1]. Group 2: Market Pressure and QT Implications - During the QT period, indicators show that the funds withdrawn from the financial system have reached a critical point, leading many economists to believe that the QT window is officially closed if policymakers wish to maintain control over the federal funds rate [4]. - Deutsche Bank strategists expect the FOMC to announce the end of QT at the upcoming meeting, while some analysts express uncertainty about whether this will happen [4]. - Federal Reserve officials have provided vague guidance on the future of QT, with Chairman Powell mentioning that QT may end in the coming months while emphasizing the need for flexibility in balance sheet management [4]. Group 3: Potential for Market Interventions - The Federal Reserve's balance sheet expanded significantly during the COVID-19 pandemic, and the current QT process has reduced its holdings from approximately $9 trillion to $6.6 trillion [5]. - The Fed's previous aim to withdraw excess liquidity was to ensure sufficient cash in the financial system and maintain the federal funds rate at desired levels, but there are no clear indicators for when these goals will be achieved [5]. - Some analysts suggest that the current pace of QT is nearly stagnant, and even if an announcement to terminate QT is made soon, it may not stabilize the money market as needed [5]. Group 4: Future Actions and Predictions - Analysts from JPMorgan suggest that after terminating QT, the Federal Reserve should "immediately" implement temporary market interventions and lower the borrowing rate of the Standing Repo Facility to enhance its attractiveness [6]. - Evercore ISI predicts that the Fed will need to turn to net purchases of bonds earlier than planned, estimating monthly net purchases of about $35 billion in Treasury bonds starting in the first quarter of next year [7]. - There is a consensus that the Fed's future bond purchases will primarily focus on short-term Treasury bills, while the reduction of MBS holdings may continue due to challenges [7].

Core Viewpoint - Morgan Stanley strategists highlight that even after the end of Quantitative Tightening (QT), the Federal Reserve may still need to implement additional liquidity measures to alleviate potential pressures in the financial system [1][2]. Group 1: Federal Reserve's Actions - The Federal Reserve has seen over $2 trillion in funds leave the financial system since initiating balance sheet reduction in June 2022, leading to tight interbank liquidity and rising short-term interest rates [1]. - Market observers suggest that the current situation is reminiscent of 2019, when the New York Fed injected approximately $500 billion in short-term liquidity through large-scale repurchase operations after the end of QT [2]. - Morgan Stanley anticipates that the Federal Reserve may again resort to similar measures, including temporary open market operations and lowering key liquidity support tool rates to ease financing pressures during critical settlement periods [2]. Group 2: Liquidity Management Tools - The Federal Reserve may consider lowering the Standing Repo Facility (SRF) rate, which is a crucial tool for qualified institutions to obtain cash through collateralized government and agency securities [3]. - This action could not only reduce overnight repo rates (SOFR) and tri-party repo rates (TGCR) but also encourage dealers to use the SRF more flexibly, transforming it from a "backup facility" into a daily liquidity management tool [3]. Group 3: Market Conditions and Predictions - The issuance of a large volume of short-term Treasury securities by the U.S. Treasury continues to absorb market liquidity, exacerbating rising interbank financing costs [4]. - The Federal Reserve's reserves fell below $3 trillion earlier this month, indicating tightening cash levels within the financial system [4]. - Morgan Stanley predicts that the Federal Reserve may initiate a monthly purchase plan of approximately $8 billion in short-term Treasury securities by early 2026 to enhance cash levels in the financial system [4]. - The current market conditions, while similar to 2019, exhibit key differences such as lower volatility in the money market and a more developed set of liquidity support tools established by the Federal Reserve [4].

Core Viewpoint - The Federal Reserve may take additional measures to address pressures in the funding markets, even after potentially ending its balance sheet reduction this week [1][2] Group 1: Federal Reserve Actions - Multiple Wall Street banks, including JPMorgan, expect the Fed to stop reducing its $6.6 trillion portfolio of U.S. Treasuries and mortgage-backed securities (MBS) as early as this month [1] - JPMorgan strategists anticipate that the end of quantitative tightening (QT) will prevent further liquidity loss in the system, but funding pressures may persist [1] - The Fed is likely to implement temporary open market operations to alleviate common market tensions during key payment dates [1][2] Group 2: Market Conditions - Since the Fed began reducing its asset portfolio in June 2022, over $2 trillion has exited the financial system, leading to a significant drop in the reverse repurchase agreement (RRP) balance [2] - Various borrowing rates used in interbank lending have risen and remained high, indicating that bank reserves have not fully circulated within the financial system [2] - The Fed's benchmark rate has increased four times since the last meeting in September, reflecting tighter liquidity conditions [2] Group 3: Future Expectations - Once the Fed halts the reduction of its Treasury holdings, it is expected to reinvest funds into newly issued Treasuries to rebuild bank reserves, with regular T-bill purchases anticipated to start in early 2026 [2] - JPMorgan strategists suggest that the Fed should consider lowering the rate on the Standing Repo Facility (SRF) by 5 basis points to encourage more active use of the facility [3] - Market observers believe that the Fed's work will not be complete after ending asset reduction, as it may need to expand its asset size again to maintain balance in the reserves market [4]

Group 1 - The Federal Reserve is expected to end its three-year quantitative tightening (QT) this week to alleviate pressure on banks amid tightening funding conditions in the money market [1][3] - Since the initiation of QT in June 2022, the Federal Reserve has allowed over $2 trillion in U.S. Treasury and mortgage-backed securities to mature without reinvestment, tightening the financing environment [1][2] - The Federal Reserve's balance sheet currently stands at $6.59 trillion, which is over $2 trillion higher than pre-pandemic levels [3] Group 2 - QT is the reverse operation of quantitative easing (QE), which was last used during the pandemic to prevent economic and financial crises [2] - The Federal Reserve slowed the pace of QT in April, reducing the monthly reduction of U.S. Treasuries from $25 billion to $5 billion while maintaining a maximum reduction of $35 billion for mortgage-backed securities [2] - The use of the New York Fed's standing repo facility has recently reached pandemic levels, indicating a potential shift from "ample" to "adequate" liquidity in the banking system [3] Group 3 - Concerns about liquidity shocks are driving the Federal Reserve to take action to avoid a repeat of the September 2019 QT episode, when short-term financing costs surged above the Fed's target range [3] - Critics argue that while QE prevented market collapse during the pandemic, it also contributed to the most severe inflation surge in a generation [3][4] - U.S. Treasury Secretary Yellen criticized the Fed's QE program as "deviating from its mission," claiming that its balance sheet policies exacerbate inequality, a claim denied by Fed officials [4]

Core Insights - There are indications that a significant block trade occurred in the U.S. interest rate market, likely positioning for the Federal Reserve's upcoming announcement to end its quantitative tightening (QT) policy [1][2] - The trade involved 40,000 contracts expiring in November, betting that the average Secured Overnight Financing Rate (SOFR) will be less than 9 basis points above the expected federal funds rate [1] - Analysts suggest this trade marks a shift in trends observed this year, reflecting growing expectations that the Fed will announce the end of QT at its policy meeting [1][2] Group 1: Trade Dynamics - The trade is essentially a bet that if the Fed announces a reduction in QT and implements a 25 basis point rate cut, the November SOFR will drop to 3.95% or lower, while the federal funds rate will be at least 3.86% [2] - This contrasts sharply with forward market expectations, where traders anticipated that by the end of November, SOFR would be 10 basis points higher than the federal funds rate, indicating tight repo financing conditions [2] - The scale of the trade suggests a significant interest rate risk exposure, equivalent to holding $2 billion to $3 billion in ten-year Treasury bonds [1][2] Group 2: Implications of Ending QT - Ending QT is expected to lead to lower repo rates, as the Fed will reinvest maturing securities, halting the decline in bank reserves and increasing system liquidity [3] - The recent rise in repo rates has been attributed to aggressive short-term Treasury issuance by the U.S. Treasury following the summer debt ceiling resolution, which increased demand for repo financing [3] - Market expectations indicate that the Fed may provide liquidity support through various means, including injecting reserves into the system [4] Group 3: Market Sentiment and Divergence - The unusual inversion in the U.S. interest rate market highlights a shift in power dynamics within the short-term financing market [5] - Not all market participants agree that the block trade is solely driven by expectations of ending QT; some believe it reflects a broader trend of valuation expansion, suggesting investors may be "de-risking" at high levels [5]

Core Viewpoint - Progress in US-China trade negotiations is boosting market sentiment, with potential benefits for risk assets if an agreement is reached on Thursday [1] Group 1: Market Sentiment - The ongoing US-China trade talks are positively influencing market emotions, suggesting a favorable outlook for risk assets [1] - Bitcoin (BTC) has maintained a volatile stance this month, hovering around early-month levels, as the market watches for indications of the Federal Reserve potentially ending quantitative tightening (QT) [1] Group 2: Cryptocurrency Market - Current options skew for BTC and Ethereum (ETH) has become neutral, indicating a recovery in risk sentiment [1] - However, if BTC fails to break through critical technical levels, the historical trend of "Uptober" experiencing seven consecutive years of gains may be at risk [1]

全球金融市场即将迎来"超级央行周"。 来源：证券时报 在美联储降息预期升温的刺激下，本周美股三大指数全线反攻，集体创出历史新高，道指、纳指本周累 计涨幅均超过2%。展望下周，美联储、欧洲央行、日本央行和加拿大央行将陆续公布利率决议，目前 市场普遍预期，美联储将再次降息25个基点。投资者还将重点关注美联储主席鲍威尔在新闻发布会上措 辞，以捕捉未来利率下调幅度与速度的信号。 与此同时，美股市场将迎来"超级财报周"，美股"科技七巨头"中的谷歌、Meta、亚马逊、苹果、微软将 陆续披露财报。有分析指出，考虑到"科技七巨头"在美股市场的市值占比，且股价均处于历史新高附 近，一旦业绩不及预期，或将引发美股市场剧烈波动。 "超级央行周"来袭 展望下周，全球金融市场关注的焦点将是美联储的议息会议。根据日程安排，美联储将于美东时间10月 28日至29日召开议息会议，将于美东时间29日（北京时间30日凌晨）宣布利率决定，市场普遍预计美联 储将再次降息25个基点，至3.75%～4%区间。 据CME"美联储观察"，美联储10月降息25个基点的概率为98.3%，维持利率不变的概率为1.7%；美联储 12月累计降息50个基点的概率为93 ...

Group 1: Central Bank Focus - The upcoming week is termed "Super Central Bank Week," with major central banks including the Federal Reserve, European Central Bank, Bank of Japan, and Bank of Canada set to announce interest rate decisions [1][2] - The market widely anticipates a 25 basis point rate cut from the Federal Reserve, bringing the target range to 3.75%–4% [2][3] - The probability of a 25 basis point cut in October is estimated at 98.3%, while a cumulative cut of 50 basis points by December is projected at 93.4% [2] Group 2: Economic Indicators - Investors will focus on the U.S. core PCE price index for September, which previously showed a year-on-year growth rate of 2.9%, exceeding the Federal Reserve's 2% target [3] - The U.S. GDP data for Q3 will be released on October 30, with estimates suggesting that the ongoing government shutdown may reduce the GDP growth rate by 0.45 percentage points [4] Group 3: Earnings Season Highlights - The upcoming week is expected to be the busiest for earnings reports, with over 170 companies, including five of the "Tech Giants" (Microsoft, Apple, Alphabet, Amazon, Meta), set to report [5][6] - Apple is projected to report earnings of $1.76 per share and revenue of $101.71 billion, driven by strong pre-sales of the new iPhone 17 and recovery in the Chinese market [5] - Alphabet's expected revenue is $86 billion, with earnings per share at $2.17, while Amazon's revenue is anticipated at $179.2 billion, slightly above market expectations [5][6] Group 4: Market Expectations - Despite a slowdown in profit growth for the "Tech Giants," their profit growth is still expected to be significantly higher than the overall S&P 500 companies, with estimates of 16.6% versus 8.1% [6] - The "Tech Giants" are also key players in the AI sector, which has been a major driver of stock market growth in recent years [7]