Core Viewpoint - Dutch International Group's interest rate strategists maintain a neutral stance on U.S. Treasuries in the short term, anticipating a relatively mild core PCE month-on-month increase of 0.2%, which may boost market optimism and drive down Treasury yields [1] Group 1 - The strategists expect the 10-year U.S. Treasury yield to rise to 4.5% by 2026 [1] - There is a potential opportunity to shift towards a more bearish position on 10-year U.S. Treasuries at the appropriate time [1] - The Federal Reserve shows little concern regarding economic growth prospects, and recent unemployment claims data indicates a positive outlook for the current job market [1] Group 2 - Inflation data is expected to begin rising, with ongoing supply-side pressures [1] - These combined factors suggest an upward trend in yields [1]

Core Viewpoint - The Federal Reserve has initiated its first interest rate cut of the year, reducing rates by 25 basis points, and anticipates two more cuts within the year due to increasing employment risks [2][3][5]. Summary by Sections Interest Rate Decision - The Federal Reserve lowered the federal funds rate target range from 4.25%-4.5% to 4.00%-4.25%, marking the first rate cut in nine months [5][6]. - The decision was widely expected by investors, with a 96% probability of a 25 basis point cut predicted by futures markets prior to the announcement [5][6]. Employment and Economic Outlook - The Fed's statement highlighted a slowdown in job growth and a slight increase in the unemployment rate, indicating a shift in risk balance [5][6][11]. - The updated median GDP growth forecast for this year is 1.6%, slightly higher than previous estimates, while the unemployment rate is projected to reach 4.5% by year-end [14][16]. Inflation and Economic Risks - Inflation remains a concern, with the PCE inflation rate expected to rise to 2.7% year-on-year in August, and core PCE inflation at 2.9% [16][17]. - The Fed acknowledges a dual risk scenario where employment risks are increasing while inflation has not been fully controlled, complicating policy decisions [18][19]. Market Reactions and Predictions - Market analysts predict that the S&P 500 index could rise by 0.5%-1% following the rate cut, although there may be a 3-5% pullback before the end of the month [20]. - Historical data suggests that both stocks and bonds typically perform positively around the time of the first rate cut, with stocks showing a median increase of about 5% in the 50 days following a cut [20].

Core Insights - The Federal Reserve's median forecast for core PCE in 2025 is 3.1% and for 2026 is 2.6% [1]

Core Viewpoint - The Federal Reserve's interest rate cut in September is almost certain, but the path for further cuts within the year remains uncertain, with a focus on the upcoming meeting for future economic forecasts and the dot plot for rate cuts [1] Group 1: Economic Indicators - The core PCE for July met market expectations, indicating stability in inflation metrics [1] - The dollar index has been experiencing fluctuations and a downward trend, reflecting market sentiment [1] Group 2: Market Sentiment and Political Factors - Recent events, including Trump's dismissal of a Federal Reserve board member, have heightened concerns regarding the independence of the Federal Reserve [1] - The ongoing conflict between Russia and Ukraine, with limited progress towards a ceasefire, has shaken external confidence in the dollar's foundation [1]

Group 1 - The current gold price is experiencing slight fluctuations, trading at 3334.08, with expectations to test resistance levels above 3370 [1] - COMEX gold price decreased by 0.15% to 3383.50 USD/oz, while Shanghai gold futures fell by 0.01% to 776.08 CNY/g [3] - The Federal Reserve faces challenges regarding interest rate decisions, particularly with core PCE expected to exceed the 2% target by 100 basis points [3] Group 2 - Historical patterns suggest that after the current consolidation phase, gold prices are likely to rise again, although there are signals indicating potential downward risks [4] - Key support levels for gold are identified at approximately 3270 USD and 3200 USD, with bullish sentiment expected if these levels are reached [4] - The 4-hour MACD shows a weakening trend, indicating that gold may face challenges in maintaining upward momentum unless it stabilizes above 3347 [4][5]

Core Viewpoint - The Federal Reserve's decision-makers, particularly those concerned about core PCE deviating from the 2% target, are likely to support a "insurance rate cut" only if the August non-farm payroll data, to be released on September 5, shows further weakness [1] Group 1 - The average job growth in the U.S. over the past three months is currently only 35,000 [1] - Chris Weston from Pepperstone indicates that the Fed's credibility is under significant pressure [1] - A rate cut in September, while core PCE is expected to exceed the target by 100 basis points, would be a challenging decision in any environment [1] Group 2 - It remains unclear whether the effects of tariffs will gradually become apparent [1]

Core Viewpoint - The U.S. job growth average over the past three months is only 35,000, leading to concerns about the Federal Reserve's credibility and potential for an "insurance rate cut" if the August non-farm data, to be released on September 5, shows further weakness [1] Group 1 - The Federal Reserve decision-makers, particularly those worried about core PCE deviating from the 2% target, may support a rate cut if the upcoming employment data is weak [1] - The core PCE is expected to exceed the target by 100 basis points, making a rate cut in September a challenging decision under any circumstances [1] - There is uncertainty regarding whether the effects of tariffs will gradually become apparent [1]

Group 1 - The U.S. Personal Consumption Expenditures (PCE) price index increased by 0.3% month-on-month and 2.6% year-on-year in June, indicating a rise in inflation [1] - The core PCE price index, excluding food and energy, also rose by 0.3% month-on-month and 2.8% year-on-year, with the year-on-year increase remaining unchanged from May [1] - Consumer spending and personal income both grew by 0.3% month-on-month in June, while the personal savings rate stood at 4.5% [1] Group 2 - The increase in prices for various imported goods, including furniture and appliances, was noted, with furniture prices rising by 1.3% and appliances by 1.9% month-on-month [1] - The Federal Reserve maintained the federal funds rate target range at 4.25% to 4.5%, with Chairman Powell indicating that premature rate cuts could fail to address inflation fully [2]

Group 1 - The core point of the article is that Federal Reserve Chairman Jerome Powell indicated a potential year-on-year increase of 2.7% in the core PCE for June, with tariffs contributing to rising prices of certain goods, while long-term inflation expectations remain aligned with the 2% target [1] Group 2 - The mention of tariffs suggests that trade policies are influencing commodity prices, which could have implications for various sectors reliant on these goods [1] - The alignment of long-term inflation expectations with the 2% target indicates a stable outlook for monetary policy, which may affect investment strategies across different industries [1]

Group 1 - The recent consumer price index (CPI) data for June shows a complex picture influenced by tariffs, with core CPI rising only 0.2% month-over-month, slightly below market expectations [1] - Core goods prices have seen a significant increase for the first time since February, particularly in household items and clothing, indicating the impact of tariffs on consumer prices [2] - Financial institutions predict that the core personal consumption expenditures (PCE) index will outperform core CPI, with expected month-over-month growth between 0.29% and 0.34%, which may reduce the likelihood of interest rate cuts by the Federal Reserve [1][5] Group 2 - Core CPI year-over-year growth increased from 2.8% to 2.9%, while core goods prices rose by 0.2%, marking the strongest performance since February 2023 [1] - The trade-weighted effective tariff rate in the U.S. has risen to 14%-15%, significantly higher than the previous year's 2.5%, with an estimated 50% of tariff costs expected to be passed on to consumers [2] - The anticipated core PCE growth of 0.34% in June is driven by stock market rebounds and rising prices in investment-related services, reinforcing the Federal Reserve's current monetary policy stance [5]