Group 1 - The outlook for policy interest rates indicates that a rate cut by the Federal Reserve in December is not guaranteed, with significant disagreement among FOMC members about whether to pause [1] - The composition of the balance sheet has not been decided, and adjustments will be gradual, aiming for a shorter duration of the balance sheet [1] - The employment market is cooling due to restrictive policies, but there is no significant worsening in job market weakness, with job vacancies indicating stability over the past month [1] Group 2 - Inflation data shows that the September CPI was more moderate than expected, with core PCE potentially at 2.3% or 2.4% when excluding tariffs, and non-tariff inflation remaining close to the 2% target [1] - The potential government shutdown could impact the December FOMC monetary policy meeting, as private sector data cannot replace government statistics [1] - Market reactions include a rise in the 10-year U.S. Treasury yield by over 8 basis points, stabilizing around 4.0583%, and a rise in the 2-year Treasury yield by over 10 basis points, stabilizing around 3.5919% [1]

Al Drago / Bloomberg via Getty Images Federal Reserve policy committee members, including Lisa Cook, voted to cut their influential fed funds rate Wednesday. Key Takeaways The Federal Reserve lowered its key interest rate today by a quarter of a percentage point, as widely expected. Fed officials aim to boost the faltering job market as concerns over inflation take a back seat to fears that unemployment could rise. The Federal Reserve has once again cut its benchmark interest rate, aiming to breathe ...

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][2]. Group 1: Rate Cut Expectations - The market anticipates a rate cut, but there may be internal disagreements within the Fed regarding future monetary policy direction due to a lack of economic data caused by the government shutdown [2][5]. - Fed Chair Jerome Powell has expressed concerns about the labor market, indicating a potential consensus for the rate cut, while private sector data shows a decline in employment [2][3]. Group 2: Inflation Concerns - Despite acknowledging risks in the labor market, some Fed officials remain concerned about inflation, with the core CPI rising 3% year-over-year, exceeding the Fed's target by one percentage point [3][5]. - There is a significant divide within the Fed, with some members advocating for immediate rate cuts while others prefer to wait due to inflation risks [3][5]. Group 3: Economic Data Challenges - The government shutdown has created a data void, complicating the Fed's ability to assess the current economic situation, with only limited CPI data available [6][7]. - Analysts expect Powell to communicate uncertainty regarding future policy paths, especially in light of missing employment data [6][7]. Group 4: Balance Sheet Reduction - A key point of discussion is whether the Fed will officially announce an end to its balance sheet reduction, with major banks predicting this could happen during the meeting [8][11]. - The Fed's decision on balance sheet reduction will be influenced by the level of bank reserves, which have recently fallen below $3 trillion [9][11].

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 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: 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]

A fresh reading Friday showing that inflation cooled slightly in September is likely to keep the Federal Reserve on course for another quarter-percentage-point interest rate cut next week amid continued concerns about the job market. The Consumer Price Index (CPI) clocked in at 3% for the month of September, a tenth of a percent lower than expected, but inching up from the 2.9% rate in August. On a core basis, which excludes volatile food and energy prices and is the preferred Fed measure, inflation also ...

Core Insights - The report from Minsheng Securities indicates that September's inflation is just the beginning of a series of "data shocks," with expectations of accelerated inflation in Q4 and better-than-expected employment data, leading to a more cautious approach from the Federal Reserve regarding monetary easing [1][3][14] - The market's previous "blind euphoria" is expected to cool down, with short-term fluctuations in precious metals and risk assets likely to continue [1][3] Inflation Trends - Q4 core inflation is anticipated to face an upward turning point, driven by new inventory demands and the impact of tariffs, which will further amplify inflationary pressures [1][15] - The September CPI is projected to rise above 3%, with core CPI growth expected to remain steady at 3.1%, reflecting a divergence between rising goods prices and declining service inflation [8][14] Factors Influencing Prices - Price increases in goods are primarily driven by two factors: heightened demand for new vehicles and the impact of tariffs on retail prices, particularly for imported goods [7][15] - Service inflation is expected to slow down, which may offset some of the upward pressure from goods inflation, particularly in housing and travel sectors [11][14] Federal Reserve's Monetary Policy - The Federal Reserve's path for easing may be more constrained than the market currently anticipates, with potential for a pause in rate cuts in December or January due to rising inflation alongside a recovering job market [1][15] - The upcoming Supreme Court ruling on tariffs could provide the Fed with a more flexible decision-making window, potentially easing inflationary pressures if tariffs are deemed unlawful [15][18]

Summary of Key Points from Conference Call Industry Overview - The conference call discusses the Chinese economy and its strategic planning under the "Fifteen Plan" (十五规划), focusing on maintaining economic growth and addressing challenges in various sectors, particularly technology and real estate. Core Insights and Arguments 1. **Economic Growth Target**: The GDP growth target for the "Fifteen Plan" is expected to be set above the potential growth rate, reflecting a commitment to maintaining necessary growth levels [3][4][6]. 2. **Role of Technology Innovation**: Technology innovation is emphasized as a core component of the "Fifteen Plan," with increased fiscal support directed towards enterprises and industries to enhance their innovative capabilities [4][5]. 3. **Macroeconomic Stabilization Policies**: The implementation of macroeconomic stabilization policies aims to reduce market volatility and provide greater certainty for capital markets, thereby boosting investor confidence [6][7]. 4. **Deflationary Pressures**: The Chinese economy is currently facing deflationary pressures, particularly in the manufacturing and export sectors. Solutions include enhancing pricing power through supply-side adjustments [7][8]. 5. **Challenges in Domestic Demand**: The domestic market is under pressure, especially due to real estate issues and a slowdown in urbanization. Future urbanization efforts may focus on less developed regions to promote balanced development [8][9]. 6. **Unified National Market**: The establishment of a unified national market aims to address issues of chaotic low-price competition and promote positive price adjustments, which will support supply-side reforms [9][10]. 7. **Fiscal Policy for Economic Growth**: The fiscal policy for 2025 is designed to maintain a strong stance, with a nominal deficit rate of 4% and an actual deficit rate projected to remain around 10%, focusing on social welfare and transfer payments [10][11]. 8. **Employment Market Challenges**: The employment market faces challenges, particularly for low-skilled workers and recent graduates. Measures include subsidies for job stability and skills training [12][13]. 9. **International Trade Dynamics**: China's technology sector is expected to gain competitiveness, reducing reliance on U.S. trade, which enhances China's position in global trade dynamics [14][15][16]. 10. **Diversification of Trade Partners**: There is a trend towards diversifying trade partners, with increased trade with developing countries, particularly in Africa, to mitigate the impacts of changing U.S.-China trade relations [18]. Additional Important Insights - The call highlights the importance of aligning fiscal policies with social needs and adjusting the central-local fiscal relationship to alleviate local financial pressures [11][12]. - The discussion on the semiconductor industry indicates that China is on track to become a major player in chip exports, reflecting significant advancements in technology [16][17]. - The strategic approach to U.S.-China relations emphasizes a balance between responding to U.S. actions and maintaining a stable economic environment [17][18].

一个月前，经济学家还预计今年仅会再降息一次。但随着美联储政策制定者近期转向支持额外降息，新 的预测随之调整。 当前美联储面临双重风险：关税可能导致本已高企的通胀进一步攀升，同时劳动力市场或进一步疲软。 美联储似乎更看重后者，因此在上月进行了2023年12月以来的首次25个基点降息。 在117名受访经济学家中，除2人外，其余115人均预测美联储将在10月29日再次降息25个基点，使利率 降至3.75%-4.00%区间。另有2人预计10月降息25个基点、12月降息50个基点。 对于12月是否再次降息，支持的经济学家比例降至71%。此次调查开展于10月15日至21日。 金融市场交易员信心更足，已在利率期货合约中完全消化了今年再降息两次的预期。 包括美联储主席鲍威尔在内的多名联邦公开市场委员会（FOMC）成员均表示，将持续关注就业市场。 然而，已持续三周的政府停摆导致关键的就业与通胀官方数据延迟发布，令经济前景变得模糊。 "坦诚地说，当前FOMC中，约有一半成员更关注劳动力市场，另一半则聚焦通胀风险。"汇丰银行 （HSBC）美国经济学家瑞安·王（Ryan Wang）表示。 "美联储面临的难题在于，就业增长放缓是否主要 ...