Report Industry Investment Rating - Stronger than the market: Expected to outperform the market by more than 5% in the next 6 months [5] - Neutral: Expected to perform within ±5% of the market in the next 6 months [5] - Weaker than the market: Expected to underperform the market by more than 5% in the next 6 months [5] Core View of the Report - In the January 2026 meeting, the Fed decided to keep the policy rate unchanged at 3.5 - 3.75%, with Governors Milan and Waller voting against and advocating a 25BP rate cut [2] - The Fed's statement changes mainly include modifying the description of economic growth from "moderate" to "solid" and indicating that the unemployment rate has shown some signs of stabilization [2] - Powell affirmed the economic resilience and still did not consider rate hikes as the baseline scenario. The next rate cut will comprehensively consider inflation and employment [2][3] - There was not much incremental information in this meeting, and Powell's stance was generally mild. The US Treasury yields fluctuated little, and the market's forecast of the rate cut amplitude this year remained at around 46BP [2][4] - In terms of strategy, the resilience of the US fundamentals in Q1 may limit the downward space of long - term yields. Short - term US Treasuries have certain allocation value [2] Summary by Related Catalogs Fed Meeting Decisions - The Fed kept the policy rate at 3.5 - 3.75% in the January 2026 meeting, and two governors voted against and proposed a 25BP rate cut [2] Changes in the Fed's Statement - The description of economic growth was changed from "moderate" to "solid", and it was stated that the unemployment rate has shown some signs of stabilization, while the description of paying attention to employment downside risks was removed [2] Powell's Stance - Powell affirmed the economic resilience, stating that the economy has once again surprised with its strength [2][3] - He believed that the current policy rate is at the upper edge of the neutral rate forecast range, and it is more in the neutral or slightly restrictive range [2][3] - Rate cuts may still be the baseline expectation. The next rate cut will comprehensively consider inflation and employment, and rate hikes are not the Fed's baseline expectation [2][3] Asset Price Performance - After the meeting, US Treasury yields fluctuated little, and the market's forecast of the rate cut amplitude this year remained at around 46BP [2][4] Investment Strategy - The resilience of the US fundamentals in Q1 may limit the downward space of long - term yields. Short - term US Treasuries have certain allocation value. If January inflation continues to exceed expectations seasonally, it may provide a better short - term allocation window [2]

Core Viewpoint - The President of the Philadelphia Federal Reserve Bank, Anna Paulson, reiterated that if the U.S. economy achieves her expectations of easing inflation and stabilizing the job market, the Federal Reserve may lower short-term interest rates later this year [1][3]. Group 1: Economic Outlook - Paulson expressed an optimistic baseline expectation, forecasting a stable job market, economic growth around 2%, and inflation rates to fall back to approximately 2% by the end of the year [1][3]. - She indicated that if these targets are met, a modest adjustment to the federal funds rate by the Federal Reserve would likely be appropriate [1][3]. Group 2: Monetary Policy - Current monetary policy is described as "slightly restrictive," which is expected to help bring inflation down to the target level of 2% [2][4]. - Paulson supports the Federal Open Market Committee's (FOMC) decision to lower rates by a total of 75 basis points last year, citing rising risks in the job market as a key reason for this support [2][4]. Group 3: Job Market Insights - The job market is seen as a better indicator of economic momentum, with current weak hiring conditions not aligning with strong GDP data [5]. - Paulson noted that while the job market is gradually cooling, it has not collapsed, indicating a complex economic landscape [2][4].