Core Viewpoint - The Federal Reserve is expected to lower the benchmark interest rate by 0.25 percentage points to a range of 4% to 4.25%, marking the lowest level since the end of 2022, but the focus is on future monetary policy direction rather than the immediate rate cut [4][13]. Economic Conditions - The significant slowdown in the job market is a primary reason for the Fed's shift in policy [5]. - Recent data shows that from June to August, the average monthly job growth was only 29,000, far below the expected 150,000, with a downward revision of 911,000 jobs added over the past year [7]. - The Consumer Price Index (CPI) rose by 2.9% year-on-year in August, the highest level this year, exceeding the 2% policy target, although concerns about inflation are being overshadowed by the urgency of declining employment [8]. Political Context - The upcoming Fed meeting is characterized by unprecedented political pressure, with President Trump advocating for a drastic rate cut to 1% and criticizing Fed Chair Powell [9][11]. - There are ongoing personnel disputes within the Fed, including attempts by Trump to influence board appointments, which could have long-term implications for Fed policy [11][12]. Market Focus - While a rate cut is anticipated, the market is more concerned with the Fed's future signals regarding monetary policy [13]. - Fed Chair Powell's emphasis on prioritizing employment over inflation will be closely monitored, as will the Fed's updated economic forecasts, which will influence market expectations for future rate cuts [14].

Core Viewpoint - The Federal Reserve is preparing to implement its first interest rate cut of the year amidst a divided stance among its members, balancing a weakening job market against inflation risks from President Trump's tariff policies [1][2]. Group 1: Interest Rate Decision - Investors widely expect the Federal Open Market Committee (FOMC) to announce a 25 basis point rate cut in the upcoming policy vote [1]. - There is a possibility of a "three-way split" vote, indicating a lack of consensus on the action to be taken, with some members advocating for a larger cut while others prefer to maintain current rates [2]. Group 2: Economic Indicators - The core disagreement among Fed officials revolves around the assessment of tariffs' impact on inflation, with some officials believing that inflation risks remain despite a 4.3% unemployment rate [3]. - Recent economic data, including a rise in initial jobless claims to the highest level since 2021 and the first monthly job loss since the pandemic, are being cited as reasons for more aggressive rate cuts [3][4]. Group 3: Political Pressures - The meeting is also influenced by unique political pressures, including ongoing attacks from President Trump on Fed Chair Powell and the potential implications of these pressures on the Fed's decision-making independence [5]. - Some analysts suggest that a hawkish dissenting vote could politically benefit Powell by balancing the pressure for aggressive cuts from Trump and his appointees [5]. Group 4: Future Guidance - The complex economic backdrop and tense political climate suggest that future policy guidance from the Fed will be uncertain, with the upcoming quarterly economic forecast expected to show a wide range of opinions among committee members [5][7]. - The economic projections are anticipated to be highly dispersed, reflecting the varied views within the committee [7].

Employment Market Overview - The UK employment market is facing its most severe test since the pandemic, with the unemployment rate expected to rise to 5% by August, the highest level since early 2021, surpassing the Bank of England's forecast of 4.9% for Q4 [1] - The official unemployment rate for Q2 was recorded at 4.7%, with London having the highest unemployment rate in the UK at approximately 6% among residents aged 16 to 65 [2] Recruitment Trends - The current employment slowdown is primarily due to widespread hiring freezes rather than mass layoffs, leading to a significant reduction in job vacancies [2] - Job vacancies decreased by 44,000 in the three months ending in June, marking the 37th consecutive decline and bringing the total vacancies well below the pre-pandemic level of 718,000 [2] Wage Growth Dynamics - Despite the employment downturn, wages are experiencing strong growth, with an average increase of around 5%, creating a perplexing situation where job availability is decreasing while wages continue to rise [3] Structural Challenges - Structural factors contributing to employment weakness include an aging workforce and an increase in the number of individuals classified as "long-term sick," which is negatively impacting productivity [4] - The proportion of the population aged 16 to 65 engaged in economic activities has declined since the pandemic, making the UK an outlier among developed economies [4] Policy Dilemmas - Policymakers are caught in a dilemma between high inflation and weak employment, with the Bank of England needing to balance these competing pressures [6] - The Labour government has introduced initiatives like the "Youth Guarantee" plan and allocated £45 million to the Department for Work and Pensions to boost labor participation, although the effectiveness of these measures has been limited due to controversies [6] - The UK economy grew by only 0.3% in Q2, and rising unemployment could undermine consumer confidence and investor expectations, indicating potential fragility in the economic recovery [6]

Group 1 - The downward revision of non-farm payroll data for May and June has shifted the market's narrative regarding the U.S. economy, with interest rate markets now viewing a rate cut in September as nearly certain [1] - Morgan Stanley's chief global economist, Seth Carpenter, indicates that while the market anticipates a rate cut, many variables remain to be observed, particularly upcoming economic data [1] - The upcoming CPI data is crucial, especially in understanding how tariffs influence inflation, with historical data suggesting a lag of 3 to 5 months for the full impact of tariffs to manifest [1][2] Group 2 - Despite signs of a weakening labor market, inflationary pressures are building, which is a key argument against rate cuts [2] - The report highlights that tariffs are a significant driver of inflation, with the effects showing a clear lag; the effective tariff rate in June was reported at 8.9%, significantly lower than the announced rate of over 15% [2] - Companies, particularly in the automotive sector, are delaying price increases through inventory management, which further postpones the visible impact of inflation [2] Group 3 - The Federal Reserve's decision in September will require balancing between slowing employment and rising inflation, with trade agreement uncertainties complicating the situation [3] - The upcoming CPI report is expected to show a rise in core CPI from 0.23% to 0.32% year-on-year, driven by tariff-affected core goods [3] - Additional economic data, including another employment report and CPI report, will be released before the September FOMC meeting, making the decision environment more complex [3]

Investment Rating - The report maintains a "Buy" rating for several companies in the non-ferrous metals sector, including Zijin Mining, Shandong Gold, and Chifeng Jilong Gold [3][4]. Core Views - The combination of "tariff easing + employment slowdown" provides a premise for the Federal Reserve to lower interest rates, potentially leading to a rebound in metal prices. Optimistic expectations regarding tariff policies have heightened market sentiment, although gold has seen a decline due to reduced safe-haven demand [1][36]. - Industrial metals, particularly copper, are in a state of fluctuation due to macroeconomic uncertainties and rising inventories, while aluminum prices are supported by decreasing social inventories despite tariff policy fluctuations [1]. - Energy metals, such as lithium, are experiencing a weak supply-demand balance, with lithium prices showing signs of fluctuation. The demand for electric vehicles continues to grow, but the market remains cautious [1]. Summary by Sections Non-Ferrous Metals - The non-ferrous metals sector has seen a general increase in prices, with specific attention to gold and silver, which are influenced by macroeconomic factors and market sentiment [12][18]. - Copper prices are currently in a consolidation phase due to fluctuating macroeconomic conditions and rising inventories, with global copper stocks reported at 537,000 tons, an increase of 12,300 tons week-on-week [1][23]. - Aluminum prices are supported by a decrease in social inventories, with theoretical operating capacity in China's electrolytic aluminum industry reaching 43.87 million tons, a slight increase from the previous week [1][23]. Precious Metals - Gold prices are expected to rebound following a period of adjustment, driven by the anticipation of interest rate cuts by the Federal Reserve. The recent employment data has raised concerns about economic growth, but the overall employment market is still showing signs of slowdown [1][36]. - Silver remains strong due to industrial demand, while gold has faced downward pressure from reduced safe-haven buying [1][36]. Energy Metals - Lithium prices are currently fluctuating, with industrial-grade lithium carbonate priced at 59,000 yuan/ton, down 0.8% week-on-week. The supply side is seeing slight increases, but demand remains cautious due to market conditions [1][27]. - The demand for electric vehicles continues to rise, with cumulative sales of passenger and electric vehicles reaching 880.2 million and 438 million units respectively, showing year-on-year growth of 9% and 34% [1][27]. Company Announcements - Companies such as Chifeng Jilong Gold and Zhongse Co. have made significant announcements regarding resource verification and project investments, indicating ongoing developments in the sector [34].