Group 1 - The Federal Reserve lowered interest rates by 25 basis points to a range of 4.00-4.25% during the September meeting, revising economic and inflation forecasts upward, indicating potential for three more rate cuts by 2025 [1][42] - The S&P 500 index rose by 1.2% and the Nasdaq index increased by 2.2% during the week, reflecting a positive market response [1][2] - The U.S. retail sales for August increased by 0.6%, surpassing market expectations of a decline of 0.2%, driven by improvements in online shopping and dining services [1][46] Group 2 - The fourth round of U.S.-China trade talks resulted in a consensus on the TikTok issue, but limited progress was made on trade-related topics, with U.S. tariffs on China remaining high at 40.36% [1][28] - The average tariff rate for the U.S. on global imports is 9.75%, with significant contributions from China, which accounted for approximately $10.1 billion in tariff revenue [1][28][31] Group 3 - The 10-year U.S. Treasury yield rose by 8.0 basis points to 4.1%, indicating a shift in investor sentiment following the Fed's decision [1][10] - Emerging market 10-year bond yields mostly declined, with Turkey's yield dropping by 83.0 basis points to 29.6% [1][13] Group 4 - The Hang Seng Index and its technology sector saw increases of 5.1% and 1.1% respectively, while the financial and real estate sectors experienced declines [1][7] - In the Eurozone, most sectors declined, with communication services and materials down by 3.0% and 2.2% respectively, while technology and non-essential consumer sectors rose [1][5]

Group 1 - The report analyzes the potential scenarios for U.S. Treasury yields following a 25 basis point rate cut, categorizing them into four scenarios: unexpected, normal digestion, fully anticipated, and less than expected [4][5] - In the "normal digestion" scenario, the 10-year Treasury yield typically experiences a stable period followed by a gradual increase of 7-10 basis points after one week, as market participants reassess long-term risk [5][6] - The report suggests that the current rate cut scenario is likely to replicate the "normal digestion" model, with the 10-year Treasury yield expected to remain around 4.06% in the short term [6][7] Group 2 - The September FOMC meeting resulted in a 25 basis point reduction in the federal funds rate, maintaining the Fed's independence and signaling a shift from restrictive to neutral policy [7][8] - Economic forecasts indicate an improvement in GDP growth rates for 2025 and 2026, with expected rates rising from 1.4% to 1.6% and from 1.6% to 1.8%, respectively [9][10] - Inflation expectations have been adjusted, with the PCE inflation forecast for 2026 raised from 2.4% to 2.6%, reflecting anticipated upward pressure on prices [9][10]

Core Viewpoint - The implementation of the Inflation Reduction Act has resolved the U.S. debt ceiling issue, leading to market concerns about a significant increase in U.S. Treasury supply in Q3, potentially repeating the rapid interest rate rise seen in 2023Q3. The net issuance of Treasuries in Q3 may reach approximately $1.12 trillion, second only to 2020Q2, indicating substantial supply pressure. However, historical analysis suggests that this increase is already anticipated by the market, and a rapid rise in rates would require sustained economic growth to support it, making a repeat of the 2023Q3 scenario unlikely. If Treasury rates rise significantly in 2023Q3, it could prompt the Federal Reserve to accelerate its easing cycle [2][9]. Group 1 - The estimated net issuance of Treasuries for 2025Q3 is approximately $1.12 trillion, which is only second to the peak in 2020Q2 and exceeds the actual financing amount of $1.01 trillion in 2023Q3 [4][10][18]. - The net issuance of Treasuries is calculated as the sum of the fiscal deficit and changes in the Treasury General Account (TGA) balance, with the fiscal deficit for 2025Q3 estimated at $0.6 trillion and TGA net growth at $0.52 trillion [4][10][18]. - The actual quarterly financing amount from the Treasury is expected to be around $1.12 trillion, slightly higher than the financing amount during the supply panic in 2023Q3 [19]. Group 2 - The supply panic in 2023Q3 was primarily due to the actual quarterly financing amount significantly exceeding expectations, with a financing amount of $1.01 trillion compared to an expected $0.85 trillion [5][23][25]. - The TGA balance at the beginning of 2023Q3 was lower than anticipated due to the debt ceiling issue, which contributed to the supply panic [5][25][26]. - For 2025Q3, the expected Treasury supply is anticipated to align with market expectations, reducing the likelihood of a repeat of the 2023Q3 panic [26][28]. Group 3 - The pressure from maturing Treasuries in Q3 is not expected to be significant, with a total maturity amount of approximately $7.2 trillion for 2025Q3, which does not represent a substantial increase compared to historical data [6][33]. - The total maturity amount for medium- and long-term Treasuries in 2025 is estimated at $3.3 trillion, with $0.85 trillion maturing in 2025Q3 [6][33]. Group 4 - The total issuance of Treasuries for 2025 is estimated at $30.6 trillion, with $8.32 trillion expected in 2025Q3, indicating a high issuance pressure [7][36]. - Adjusting the debt issuance structure by increasing the proportion of short-term debt could alleviate some pressure on long-term debt issuance, but it cannot fully offset the issuance pressure in Q3 [7][45]. - The historical trend shows that the proportion of medium- and long-term debt issuance has decreased, with the current structure potentially leading to excessive short-term debt issuance that the market may struggle to absorb [7][42][44].