Core Viewpoint - Han Ya Investment predicts that the Federal Reserve will lower the federal funds rate by 25 basis points to a range of 4.0% to 4.25% in September, influenced by concerns over a weakening labor market [1] Group 1: Federal Reserve Rate Expectations - Han Ya Investment's chief investment officer and chief economist express a dovish outlook based on Jerome Powell's recent speech, indicating potential rate cuts if the unemployment rate rises to 4.3% or higher in August [1] - The firm suggests that if the unemployment rate remains stable or decreases from July's 4.2%, along with job additions close to 50,000, the FOMC may maintain current policy [1] Group 2: Market Reactions and Economic Indicators - Asset prices are expected to be highly dependent on the pace of deterioration in the U.S. labor market, with a gradual rise in unemployment potentially leading to a perception of rate cuts as a preventive measure against recession, which could benefit the stock market [1] - However, rising inflation may limit the upward potential of long-term yields, indicating a complex relationship between interest rates and market performance [1] Group 3: Currency and Global Policy Implications - A weaker dollar is anticipated to drive further rate cuts in Asia, as strong currencies combined with slowing export growth could keep inflation low and real policy rates excessively high [1] - The firm forecasts that most Asian economies will lower interest rates in the next two quarters [1]