Core Viewpoint - The delay in the nomination of Kevin Warsh to replace Jerome Powell as the Federal Reserve Chairman adds uncertainty to an already politically charged situation, raising concerns about the Fed's independence in setting monetary policy [1][4]. Group 1: Nomination Process - President Trump announced Warsh as his nominee for the Fed Chair four weeks ago, but the nomination has not progressed, which is unusual since only two similar cases have occurred since 2010 [4]. - Senator Thom Tillis has pledged to block any Fed nominations until the Justice Department's investigation into Powell regarding the Washington Fed building renovation is resolved [4][5]. - The White House is reportedly working with the Senate to expedite Warsh's confirmation, asserting that he is qualified to restore the Fed's decision-making capability [5]. Group 2: Investigation and Political Pressure - Powell disclosed a Justice Department investigation in January, describing it as part of the Trump administration's ongoing pressure to force the Fed to lower interest rates [6]. - Reports indicate that the Fed has requested a judge to dismiss subpoenas issued in the investigation, but the Fed has not commented on this [6]. Group 3: Timing and Implications - With only 11 weeks remaining until Powell's term ends on May 15, the timeline for confirmation is tighter than usual for Fed nominees [7]. - If Warsh's confirmation process is prolonged, it could create a "hanging" situation for both the nominee and the Fed as the June 16-17 meeting approaches, which may be the earliest opportunity to discuss interest rate cuts [7]. Group 4: Leadership Dynamics - The expected transition from current Fed Governor Stephen Miran to Warsh would replace one supporter of rate cuts with another, potentially allowing Trump appointees to gain a majority on the seven-member Fed Board [8]. - If Powell chooses to remain on the Board after his term ends, it would be an unusual move, indicating ongoing concerns about the Fed's independence amid unprecedented political pressure [9]. - Even if Powell stays, it is likely that the Federal Open Market Committee (FOMC) will follow established practices, with Warsh leading the committee, which may complicate his efforts to advocate for rate cuts [10].

Core Viewpoint - The Federal Reserve is challenging two subpoenas issued by U.S. Attorney Jeanine Pirro during a criminal investigation into Chairman Jerome Powell's testimony regarding a renovation project, which raises concerns about the independence of the central bank [1][2]. Group 1: Investigation Details - The investigation focuses on whether Powell provided false testimony about the costs associated with the renovation of two historical buildings during a Senate hearing last summer [3]. - Pirro's office initiated the investigation in November after multiple information requests went unanswered, leading to the issuance of subpoenas [3]. Group 2: Political Implications - The subpoenas were issued shortly after a public event where Trump criticized U.S. attorneys for not prosecuting targets he favored, indicating a political backdrop to the investigation [2]. - Republican Senator Thom Tillis has stated he will not advance any Federal Reserve nominations, including Kevin Walsh, until the investigation concludes, which could delay the confirmation process [2]. Group 3: Federal Reserve's Response - The Federal Reserve is seeking to have the subpoenas quashed, arguing that the requests may be overly broad or seek privileged information [1]. - Powell publicly responded to the investigation, suggesting it is a tactic by Trump to undermine the Fed's independence and pressure for interest rate cuts [1].

Core Viewpoint - The Federal Reserve is initiating a closed-door legal challenge against two subpoenas issued by the U.S. Department of Justice, which are part of a criminal investigation targeting Fed Chairman Jerome Powell regarding potential false statements made during congressional testimony about a building renovation project [1] Group 1 - The investigation focuses on whether Jerome Powell made false statements during his testimony last summer regarding the Federal Reserve building renovation project [1] - Jerome Powell publicly stated that the investigation is a pretext for former President Trump to pressure the Federal Reserve into lowering interest rates and undermining the independence of the central bank [1] - The Federal Reserve has begun a non-public legal process to request a judge to quash the subpoenas, aiming to avoid compliance with the investigation [1] Group 2 - Specific details of the legal challenge and the legal basis for the Federal Reserve's defense have not been disclosed to the public [1] - It is common for subpoenaed parties in similar criminal investigations to resist requests from prosecutors by arguing that the scope of the investigation is too broad or that it seeks information protected by legal privilege [1] - The legal challenge is conducted under the confidentiality rules related to grand jury criminal investigations, keeping the proceedings entirely non-public [1]

Core Viewpoint - The Governor of the Bank of England, Andrew Bailey, expressed that he believes the Federal Reserve nominee, Kevin Warsh, is a strong supporter of central bank independence [1] Group 1 - Andrew Bailey's statement highlights the importance of central bank independence in monetary policy [1] - The endorsement of Kevin Warsh by Bailey may influence perceptions of the Federal Reserve's future direction [1]

Group 1 - The internal staff at the European Central Bank (ECB) is experiencing confusion, dissatisfaction, and anxiety regarding reports that President Christine Lagarde may resign before the end of her term, raising questions about her authority [1][2] - Multiple members of the ECB's governing council are perplexed by the lack of rebuttal to external speculation, contrasting with Lagarde's firm denial of similar reports in 2025 [1][2] - Many within the ECB are uncertain about the future actions of the 70-year-old French leader, as an internal memo shared with staff did not provide more information than what was reported in the media [1][2] Group 2 - Concerns have been raised about the potential threat to the independence of the central bank, especially if Lagarde's resignation is perceived to be politically motivated [1][2]

Core Viewpoint - The speculation regarding European Central Bank (ECB) President Christine Lagarde's potential early departure is seen as detrimental to the ECB's reputation as one of the most independent central banks globally [1] Group 1: Leadership and Political Influence - Lagarde's term is set to end in late 2027, but reports suggest she may resign early to allow French President Macron to influence her successor's selection before the upcoming French elections [1] - The credibility of these reports raises concerns about the political maneuvering involved in central bank leadership appointments, indicating that European politicians may attempt to manipulate rules for favorable outcomes [1] Group 2: Impact on Monetary Policy and Political Tensions - While this potential change in leadership is unlikely to have a significant impact on monetary policy, it poses risks of escalating political tensions within Europe [1]

Core Viewpoint - The U.S. non-farm payroll data for January showed a stronger-than-expected increase of 130,000 jobs, with the unemployment rate dropping to 4.3%, leading to a reassessment of the Federal Reserve's policy path [1][4]. Employment Data - January non-farm payrolls increased by 130,000 jobs, and the unemployment rate fell to 4.3%, outperforming most prior forecasts [1][4]. - Despite the strong employment figures, there are concerns regarding the representativeness of single-month data due to previous downward revisions [2]. Policy Impact - The strong employment data has significantly reduced the probability of interest rate cuts in March and April, with market expectations for the first rate cut now pushed to mid-year or later [1][5]. - The divergence in views between the White House and the Federal Reserve regarding interest rate cuts and central bank independence adds uncertainty to the market outlook [2][6]. Political Risks - There is a notable disagreement between the White House and the Federal Reserve on the pace of rate cuts and the issue of central bank independence, which could introduce mid-term risks to the market [2][6]. Market Reactions - Following the data release, U.S. stock markets initially rose but then retreated, indicating investor caution amid the balance between economic resilience and delayed rate cuts [3]. - Bond markets saw short-term yields rise, and the yield curve experienced fluctuations, reflecting a shift in trader expectations regarding rate cuts [3]. Future Catalysts - Upcoming CPI data and weekly jobless claims will further assess the validity of the rate cut path [7]. - The strong performance of January's employment data has diminished the urgency for significant rate cuts by the Federal Reserve, but the potential for easing remains if inflation or employment data declines [7].

Core Insights - The U.S. non-farm payroll data for January showed stronger-than-expected results, with 130,000 new jobs added and the unemployment rate dropping to 4.3%, leading to a reassessment of interest rate cut expectations by the market [1][4] Employment Data - January's non-farm payrolls increased by 130,000, and the unemployment rate fell to 4.3%, exceeding most institutional forecasts [1][4] - Despite the positive employment data, there are concerns about the sustainability of this growth, as previous employment figures have often been revised downward [2] Market Reactions - Following the employment report, the stock market experienced a rise followed by a pullback, indicating investor uncertainty between economic resilience and delayed rate cuts [3] - The bond market saw short-term yields rise, and the probability of rate cuts before June was significantly reduced by traders [3] Policy Implications - Expectations for rate cuts in March and April have diminished, with a higher likelihood of any cuts being postponed until mid-year or later [1][5] - The White House emphasizes having "ample" room for rate cuts, while there are differing views within the Federal Reserve regarding the timing and necessity of such cuts [2][6] Political Factors - There is a notable divergence between the White House and the Federal Reserve regarding the pace of rate cuts and the independence of the central bank, which could impact market pricing [2][6] Future Monitoring - Upcoming CPI and initial jobless claims data will be crucial in validating the direction of monetary policy [7] - The market is expected to remain in a "data-driven and policy-disturbed" fluctuation pattern, with a focus on inflation and employment indicators as key determinants for future trends [7]

Core Viewpoint - The current monetary policy is considered to be in a good position, with expectations that the Federal Reserve may maintain interest rates for an extended period [1][2]. Monetary Policy - The Federal Reserve has kept the federal funds rate in the range of 3.5% to 3.75%, following three consecutive rate cuts last autumn [2]. - The current monetary policy is viewed as suitable for a wait-and-see approach, allowing for assessment of recent data before making further adjustments [2]. - The inflation rate is expected to remain close to 3% this year, similar to the previous two years, while the long-term inflation target is set at 2% [2]. Inflation and Costs - There is a need for more decisive evidence that price levels are consistently declining before making any adjustments to interest rates [2]. - Concerns about tariffs impacting prices have been raised, with some companies reporting increased costs due to tariff hikes, leading to price increases for consumers [5]. - Rising electricity prices and healthcare costs are also contributing to overall cost pressures [5]. Employment Market - The labor market appears to be stabilizing, with the unemployment rate at 4.4%, similar to levels from September of the previous year [7]. - Initial jobless claims remain low, although some companies have announced layoffs [7]. - Economic growth is expected to accelerate this year due to previous rate cuts and fiscal support, potentially leading to a stronger labor market and a further decrease in the unemployment rate [7]. Banking System and Central Bank Independence - A robust banking system is crucial for the economy and effective transmission of monetary policy [8]. - The Federal Reserve can ensure the banking system remains a key pillar of economic growth through tailored regulatory adjustments [8]. - Concerns about the independence of the Federal Reserve have been highlighted, particularly in light of external pressures for significant rate cuts, with historical evidence suggesting that countries with weaker central bank independence face higher inflation [8].

Report Summary 1. Industry Investment Ratings No industry investment rating is provided in the report. 2. Core Views - Aluminum: It is recommended to hold a light position before the festival. - Alumina: It shows a bottom - up rebound. - Cast aluminum alloy: It follows the trend of electrolytic aluminum [1]. 3. Summary by Related Catalogs Futures Market Electrolytic Aluminum - The closing price of the Shanghai Aluminum main contract was 23,540, up 225 from T - 1, 202 from T - 5, 975 from T - 22, and 2,375 from T - 66. The night - session closing price was 23,625. - The LME Aluminum 3M closing price was 3,130, up 20 from T - 1, 74 from T - 5, 144 from T - 22, and 265 from T - 66. - Trading volume and open interest of relevant contracts showed different degrees of change compared with previous periods [1]. Alumina - The closing price of the Shanghai Alumina main contract was 2,868, up 44 from T - 1, 96 from T - 5, 117 from T - 22, and 30 from T - 66. The night - session closing price was 2,862. - Trading volume and open interest of relevant contracts also changed compared with previous periods [1]. Aluminum Alloy - The closing price of the aluminum alloy main contract was 22,165, up 215 from T - 1 and 325 from T - 5. The night - session closing price was 22,225. - Trading volume and open interest of relevant contracts changed compared with previous periods, and the spot premium and other indicators also had corresponding changes [1]. Spot Market Electrolytic Aluminum - The domestic social inventory of aluminum ingots was 875,000 tons, up 22,000 tons from T - 1, 46,000 tons from T - 5, and 237,000 tons from T - 22. - The warehouse receipts of aluminum ingots on the Shanghai Futures Exchange were 164,500 tons, up 9,000 tons from T - 1, 14,100 tons from T - 5, and 86,000 tons from T - 22. - The profit and loss of electrolytic aluminum enterprises, import and export profit and loss of aluminum, and other indicators changed compared with previous periods [1]. Alumina - The average domestic alumina price was 2646, with no change from T - 1. The CIF price at Lianyungang and other prices also had corresponding changes. - The profit and loss of alumina enterprises in Shanxi also changed compared with previous periods [1]. Aluminum Alloy - The theoretical profit of ADC12 was 591, up 272 from T - 1. The price difference between Baotai ADC12 - A00 and the total inventory of three places also changed compared with previous periods [1]. Other Raw Materials - The prices of imported bauxite from Indonesia, Australia, and Guinea, and the price of caustic soda in Shaanxi all had different degrees of change compared with previous periods [1]. 4. Comprehensive News and Trend Intensity - The Federal Reserve may reach an agreement with the US Treasury, which may affect the $30 - trillion Treasury market and cause concerns about the loss of central bank independence, rising inflation expectations, and a decline in the dollar's attractiveness. - Wall Street expects the US core CPI to rebound to about 0.3% in January, and inflation is expected to peak in spring and then gradually decline. - The trend intensity of aluminum, alumina, and aluminum alloy is 0, indicating a neutral trend [3].