Group 1 - The Federal Reserve announced a 25 basis point interest rate cut, lowering the target range to 3.75% to 4.00%, marking the second cut of the year, reflecting a balance between economic downturn risks and inflation control [1] - Fed Chairman Powell indicated uncertainty regarding further rate cuts in December, highlighting the challenges of stimulating economic growth without triggering inflation [1] - In contrast, China's monetary policy has shown more proactive measures, with multiple reductions in the reserve requirement ratio since 2021, releasing trillions in long-term liquidity to support the real economy [1] Group 2 - As of September 2024, the People's Bank of China has further intensified monetary policy, lowering the 7-day reverse repo rate from 1.70% to 1.50% and implementing reserve requirement cuts to enhance market liquidity [2] - Historical context suggests that if the Fed's rate cut is seen as a "crisis response," it could negatively impact market confidence and lead to declines in global risk assets, including A-shares [2] - The current rate cut is characterized as "preventive," aimed at mitigating recession risks without significant signs of economic downturn, creating a relatively loose liquidity environment for global markets [2] Group 3 - The A-share market's core drivers are domestic economic fundamentals and policy direction, with external liquidity expectations providing a positive influence [3] - Sectors aligned with national industrial upgrade strategies, such as AI computing and semiconductors, are expected to attract investment due to their growth potential and innovation [3] - Challenges for the A-share market include global economic uncertainties and potential structural issues like overcapacity and slowing corporate profit growth during the recovery process [3] Group 4 - Overall, the Fed's rate cut creates a favorable external environment for A-shares, but the medium to long-term performance will depend on domestic economic recovery and the implementation of industrial policies [4] - Investors are encouraged to focus on sectors with strong internal dynamics and structural opportunities, emphasizing the importance of thorough research on industry trends and company fundamentals [4]

Group 1 - The Federal Reserve's interest rate decisions have systemic impacts on global asset pricing through liquidity expansion, interest rate transmission, and cross-border capital flows [1] - The report categorizes interest rate cut cycles into preventive cuts (to address economic slowdown risks) and rescue cuts (to respond to crises or recessions), highlighting the differences in market expectations and asset reactions [1] Group 2 - Equity assets respond to dollar rate cuts based on the nature of the cycle and economic fundamentals, showing a "liquidity first, earnings verification" transmission path with significant differentiation across market sectors [2] - In developed markets, U.S. stocks, particularly tech stocks, lead the rebound during preventive cut cycles, while during rescue cut cycles, markets experience phases of panic decline, liquidity recovery, and earnings recovery [3][4] - Emerging market stocks, particularly Chinese assets, show a pattern of "external catalysis, internal determination," with U.S. rate cuts alleviating depreciation pressure on the yuan and attracting foreign capital [5][6] Group 3 - Fixed income assets are core beneficiaries of dollar rate cut cycles, with performance differences arising from interest rate sensitivity, credit risk, and market liquidity [8] - U.S. Treasury yields exhibit a "short-end follows policy, long-end reflects expectations" characteristic, with short-term yields closely tracking policy rates during cut cycles [9] - Emerging market bonds benefit from U.S. monetary easing and yield spread advantages, with significant inflows into Chinese bonds during the current cycle [10] Group 4 - Commodity responses to dollar rate cuts show significant differentiation, with precious metals benefiting from liquidity and safe-haven demand, while industrial metals depend on economic cycles and supply-demand dynamics [13] - Gold is identified as a "certainty winner" during rate cut cycles, with its price driven by real interest rates, the dollar index, and safe-haven demand [14] - Energy prices are indirectly influenced by rate cuts, primarily driven by supply-demand relationships, with oil prices fluctuating based on economic expectations [15] Group 5 - The dollar's exchange rate is reshaped by rate cuts, with the dollar index's performance influenced by the nature of the cuts and relative economic strength [16] - Major developed currencies like the euro and yen are affected by their respective central bank policies, while emerging market currencies, particularly the yuan, show resilience due to domestic economic policies [18] Group 6 - Alternative assets exhibit varied performance during rate cut cycles, reflecting their hybrid equity-debt characteristics and sensitivity to liquidity [19] - REITs benefit from lower financing costs and attractive capitalization rates relative to bond yields during rate cut cycles, showing strong performance in recovery phases [20] - Cryptocurrencies, particularly Bitcoin, are highly volatile and sensitive to liquidity conditions, with significant price movements observed during periods of monetary easing [21] Group 7 - The core规律 of asset performance indicates that the type of rate cut cycle determines the leading assets, with preventive cuts favoring risk assets and rescue cuts initially benefiting safe-haven assets [22] - The current cycle in 2025 is characterized as preventive easing, with a focus on technology stocks and Chinese assets, while traditional asset performance patterns may be disrupted by global economic differentiation [23][24]

Report Industry Investment Rating No relevant content provided. Report's Core View - The Fed's rate cuts can be divided into preventive and relief (recessionary) rate cuts, with different policy triggering backgrounds and implementation goals [1][5]. - The Fed's preventive rate cut in September 2025 may have limited impact on China's bond market, as China's monetary policy emphasizes "independence" and focuses more on internal balance [1][88][89]. - In the fourth quarter, the economic downward pressure may increase, and the possibility of using policy tools such as RRR cuts and interest rate cuts in the future rises. Currently, the bond market has prominent allocation value, and bond yields may decline oscillating [2][90]. Summary by Relevant Catalogs 1. Types of Fed Rate Cuts - Preventive rate cuts are usually initiated when the economy shows signs of slowing but has not yet entered a recession, aiming to balance employment and inflation risks through small - scale and gradual interest rate adjustments, such as in 1995, 1998, 2019, 2024, and 2025 [1][5][79]. - Relief rate cuts often occur when the economy has fallen into a deep recession or faces a systemic crisis, characterized by large - scale and rapid interest rate cuts to stabilize the financial market, such as in 2001 - 2003, 2007 - 2008, and 2020 [1][5]. 2. Four Fed Rate - Cut Cycles Since 2000 2.1. 2001 - 2003 Relief Rate Cut - **Background and measures**: Triggered by the burst of the Internet bubble, the 9/11 terrorist attack, and corporate financial scandals. The Fed cut rates by 550 basis points from 6.5% to 1.0% [10]. - **US economic indicators**: GDP growth was sluggish, unemployment rate rose, core PCE inflation rate declined, and corporate investment was severely hit [13]. - **Impact on China's bond market**: China's central bank cut rates in 2002. The 1 - year and 10 - year Treasury yields showed different trends, reflecting the reduced sensitivity of the bond market to monetary easing when the domestic economy rebounded [19]. 2.2. 2007 - 2008 Relief Rate Cut - **Time, amplitude, and measures**: From September 2007 to December 2008, the Fed cut rates by 500 basis points to 0% - 0.25% and launched three rounds of QE [25][28]. - **Characteristics**: Fast - paced, large - amplitude, innovative policy tools, and multiple goals [29]. - **Impact on China's bond market**: The Sino - US yield spread narrowed and then fluctuated. There were changes in capital flows, with short - term international capital flowing in and out at different times [30][33][36]. 2.3. 2019 - 2020 Preventive + Relief Rate Cut - **Preventive rate cut (2019.7 - 2019.10)**: Against the background of global economic slowdown and Sino - US trade frictions, the Fed cut rates three times by 25 basis points each time. The US economy showed some recovery, and the bond market fluctuated. In China, the bond market was stable, and foreign capital increased holdings of RMB bonds [40][41][51]. - **Relief rate cut (2020.3)**: Due to the global public health event, the Fed cut rates to 0% - 0.25% and implemented unlimited QE. China also increased the easing intensity, and the bond yield declined and then rebounded [46][47][58]. 2.4. 2024 H2 Preventive Rate Cut - **Background, time, amplitude, and impact**: The Fed cut rates by 100 basis points in the second half of 2024, with a "fast - then - stable" feature. It aimed to avoid a hard landing of the economy. China's bond yields declined, and foreign capital increased holdings of Chinese bonds [60][66][67]. 3. Characteristics of the Preventive Rate Cut in 2025 - **Trigger paths**: Driven by the pressure of national debt scale and debt cost, and the marginal deterioration of the employment market [71][76]. - **Market pricing and yield trends**: The market had partially priced in the rate cut before it happened. After the rate cut in September 2025, the US Treasury yields first declined and then rose [79][80][82]. 4. Impact of the Fed's Rate - Cut Cycle on China's Bond Market - **Short - term impact**: The Fed's rate - cut expectation may attract foreign capital to flow into China's bond market through spread repair and open up space for domestic monetary policy [1][84]. - **Long - term impact**: China's bond market trend may depend more on domestic factors, including economic fundamentals and policy coordination. The influence of the Fed's policy on China's monetary policy may be weakening [87][88]. 5. Economic Situation and Bond Market Outlook in the Fourth Quarter - **Economic situation**: The economic growth in Q3 slowed down compared with Q1 and Q2. Consumption and exports may face pressure, and the external environment is also unstable, increasing the possibility of using policy tools [2][90]. - **Bond market outlook**: The bond market has prominent allocation value, and bond yields may decline oscillating. The 10 - year Treasury yield is expected to fluctuate between 1.60% - 1.80% [2][90].

Group 1: Federal Reserve Rate Cuts Overview - The Federal Reserve has conducted 5 easing cycles and 5 preventive rate cuts since 1980, with rate reductions ranging from approximately 75 basis points (bp) to 1150 bp[13] - Preventive rate cuts occur when economic growth slows but has not yet entered a recession, while easing cuts are implemented during severe economic downturns[17] - The current easing cycle shares similarities with those in 1995 and 2019, with marginal economic weakening but resilient consumption and services[5] Group 2: Asset Performance During Rate Cuts - U.S. Treasury yields typically decline significantly before the first rate cut, with average declines of 73 bp and 85 bp for easing and preventive cuts, respectively[53] - U.S. equities generally rise during preventive cuts (with an 80% success rate for the Nasdaq and S&P 500) but tend to decline during easing cuts, averaging a drop of 11%-13%[52] - The U.S. dollar usually weakens during both types of rate cuts but tends to rebound after the cycle ends, with an average increase of 2.7% six months post-cut[52] - Gold performs better during preventive cuts, with an 80% success rate, while industrial metals depend more on global demand fundamentals[52]

Group 1: Oil Market Overview - Since September, the oil market has shown a range-bound trend due to oversupply and geopolitical risks in the Middle East, with a downward shift in the price focus expected in Q4 [1] - OPEC+ has agreed to increase production by 137,000 barrels per day starting in October, abandoning the "production cut to support prices" strategy in favor of prioritizing market share, leading to increased global oil supply pressure [3][4] - The U.S. oil production is expected to rise, with the EIA predicting a record output of 13.44 million barrels per day by 2025, driven by an increase in drilling activity [5] Group 2: Geopolitical Risks - Geopolitical tensions, particularly the Russia-Ukraine conflict and U.S. sanctions on Iran, are contributing to supply uncertainty, which may limit the adjustment space for oil prices [7][8] - The U.S. and EU have intensified sanctions against Russia, including a price cap on Russian oil set at $47.6 per barrel, which could further impact global oil supply dynamics [7] Group 3: Demand Outlook - Major energy agencies maintain an optimistic outlook for global oil demand, with the EIA forecasting consumption to reach 103.8 million barrels per day by 2025, an increase from previous estimates [9] - Despite the positive demand outlook, concerns about oversupply persist, with expectations of significant increases in oil inventories due to OPEC+ production hikes [9][10]

Core Viewpoint - The Federal Reserve has lowered interest rates by 25 basis points, which was anticipated but the extent of the cut was debated, particularly between President Trump and Fed Chair Powell [3][5][21]. Group 1: Economic Context - The U.S. economy's previous claims of prosperity are now being questioned, especially after disappointing employment data, with only 73,000 jobs added in July, significantly below the expected 104,000 [11][19]. - The Bureau of Labor Statistics revised down previous employment figures by a total of 258,000 jobs, indicating a weaker job market than previously reported [13][17]. - The current inflation rate stands at 2.9%, which is above the Fed's long-term target of 2%, complicating the decision to lower rates [25][27]. Group 2: Political Dynamics - President Trump has been pressuring the Fed to lower rates more aggressively, advocating for a 50 basis point cut instead of the 25 basis points that were implemented [34][36]. - The relationship between the White House and the Fed has been tense, with Trump openly criticizing Powell and attempting to influence Fed decisions by appointing allies to the Fed [40][45]. - The urgency from the Trump administration stems from the need to stimulate the economy ahead of the upcoming midterm elections, prioritizing short-term economic performance over long-term inflation risks [55][57]. Group 3: Global Implications - The Fed's decision to lower rates is expected to lead to increased liquidity in the global market, potentially driving up asset prices linked to the dollar, such as gold and U.S. equities [60][63]. - A significant influx of dollars into the global market could benefit emerging economies, but it may also lead to challenges for U.S. exports if the dollar appreciates [67][69]. - Historical patterns suggest that the impact of rate cuts on various assets can vary significantly depending on the economic context, with current conditions indicating a complex scenario for future monetary policy [71][73].

Group 1 - The Federal Reserve announced a 25 basis point cut in the federal funds rate target range to 4.00% to 4.25%, marking the first rate cut of 2025 and following three cuts in 2024 [2][3] - The nature of the rate cut is categorized as a preventive cut, aimed at preemptively addressing potential economic risks rather than responding to a severe economic downturn [3][8] - Historical analysis shows that preventive rate cuts generally have a positive impact on the U.S. stock market, reducing corporate financing costs and potentially stimulating mergers and acquisitions [4][5] Group 2 - The current economic environment is characterized by "stagflation," with a GDP growth rate of 2.4% in Q4 2024, indicating a gradual slowdown but not a clear recession [8][9] - The inflation rate remains relatively high, with core PCE and CPI growth rates at 2.86% and 3.2% respectively, complicating the effectiveness of the current rate cut [8][10] - The first phase of the current rate cut cycle has not met expectations, with the stock market showing weak performance despite multiple rate cuts [9][10] Group 3 - There has been a significant outflow of funds from the U.S. stock market, with approximately $259 billion exiting in the first half of the year, primarily moving to safer assets like bonds and money markets [13][15] - Non-U.S. markets, particularly in China and Europe, have seen increased foreign investment, with China experiencing a net increase of $10.1 billion in foreign holdings of stocks and funds in the first half of 2025 [14][15] - The trend of capital outflow from U.S. equities is viewed as a rebalancing of asset allocation rather than a mass exodus, reflecting investor caution regarding the U.S. economy and high valuations [15][16] Group 4 - The potential impact of the Fed's second phase of rate cuts on global markets will depend on whether the Fed adopts a moderate preventive approach or a more aggressive easing strategy [17][18] - If the Fed continues with a moderate approach, U.S. stock market funds are likely to remain within the domestic financial system, while some capital may seek opportunities in global markets [17][18] - An aggressive easing strategy could lead to a temporary boost in global markets due to increased liquidity, but risks of a sharp capital outflow could arise if inflation pressures force the Fed to tighten policy [18][19]

Group 1 - The market has strong expectations for a Federal Reserve interest rate cut in September, with a 92% probability for a 25 basis point cut and 8% for a 50 basis point cut [1] - The upcoming Federal Reserve meeting on September 16-17 has raised questions about the potential impact of a rate cut on the U.S. stock market and whether it would boost U.S. equities or accelerate capital flows to other global markets [1][2] Group 2 - There are two types of interest rate cuts: preventive cuts, which are moderate measures taken to avert potential economic risks, and crisis cuts, which are aggressive actions taken during severe economic downturns [2] - Historical analysis shows that preventive cuts generally have a positive effect on the U.S. stock market, while crisis cuts often fail to prevent market declines due to existing economic challenges [7][8] Group 3 - The current economic environment in the U.S. is characterized by "stagflation," with a GDP growth rate of 2.4% in Q4 2024, which is lower than the previous quarter's 3.1% [10] - The inflation rate remains relatively high, with core PCE and CPI growth rates at 2.86% and 3.2% respectively, complicating the effectiveness of the upcoming preventive rate cuts [10][11] Group 4 - The first phase of the current rate cut cycle has not met expectations, with the stock market showing weak performance despite a total of 100 basis points cut over three months [11] - The market's reaction has been characterized by volatility, with a pattern of initial gains followed by declines, reflecting concerns over inflation and economic stability [11][16] Group 5 - There has been a notable outflow of funds from the U.S. stock market, with approximately $259 billion exiting in the first half of the year, primarily reallocating to safer assets like bonds and money markets [17][21] - Despite the outflow, the U.S. stock market remains dominant in global asset allocation, with a significant portion of funds still allocated to U.S. equities [21][22] Group 6 - The potential for a systemic shift in capital from U.S. to global markets is limited, as the outflows are more about risk management rather than a loss of confidence in U.S. equities [21][22] - Future capital flows will depend on the Federal Reserve's policy decisions and the economic landscape, with two possible strategies: a cautious approach maintaining moderate cuts or an aggressive strategy under political pressure [23][24]

Core Viewpoint - The Federal Reserve's interest rate cuts significantly impact the performance of equity, debt, and currency assets, while the relationship with commodity prices is less clear [1][2] Equity Market - Equity assets have a higher success rate during preemptive rate cuts, while they are likely to decline during crisis-driven cuts [1][2] - The success rate of equities improves one month after a preemptive rate cut, and the performance during crisis-driven cuts is closely related to the recovery of fundamentals [2] Debt Market - U.S. Treasury yields are more likely to decline during crisis-driven rate cuts, while the trend during preemptive cuts is uncertain [1][2] - After rate cuts, U.S. Treasury yields typically decrease, while the trend for Chinese bonds is generally downward, with no clear pattern for German and Japanese bonds [2] Currency Market - The strength of the U.S. dollar is inconsistent in the early stages of rate cuts, but after 2-3 months, the dollar tends to depreciate under recessionary cuts and appreciate under preemptive cuts, with the Chinese yuan showing relative independence [1][2] - The average appreciation of the euro and yen is noted during these periods [2] Commodity Market - The relationship between commodity prices and interest rate cuts is weak, with gold showing a higher average increase during crisis-driven cuts and greater elasticity in price increases [1][2] - Oil prices are less correlated with rate cuts and are more influenced by supply and demand dynamics [1]

Core Insights - The article discusses the impact of Federal Reserve interest rate cuts on various asset classes, highlighting the differences between "relief" and "preventive" rate cuts [1][2] Group 1: Stock Market - Equity assets tend to perform better during preventive rate cuts, while they are likely to decline during relief rate cuts [1][2] - The winning rate of equities increases one month after preventive rate cuts, with performance during relief cuts being closely tied to fundamental recovery [2] Group 2: Bond Market - U.S. Treasury yields are more likely to decline during relief rate cuts, while their behavior during preventive cuts is uncertain [1][2] - After rate cuts, U.S. Treasury yields typically decrease, and domestic bond yields also tend to drop in the short term, with no clear pattern observed in German or Japanese bonds [2] Group 3: Currency Market - The dollar's performance is mixed in the early stages of rate cuts, but tends to depreciate two to three months after relief cuts, while it may appreciate during preventive cuts [1][2] - The Chinese yuan shows relative independence in its movements compared to the dollar, while the euro and yen generally appreciate [2] Group 4: Commodity Market - Gold tends to have a higher average increase during preventive rate cuts, and its price elasticity is greater during relief rate cuts [1][2] - The relationship between oil prices and interest rate cuts is weak, as oil prices are more influenced by supply and demand dynamics [1][2]