Economic Overview - The latest Federal Reserve Beige Book indicates that economic activity remained largely unchanged across most regions, with two regions reporting slight declines and one region experiencing moderate growth during the reporting period from mid-October to November 17 [1] - The report highlights both inflationary pressures and weakening employment, but does not specify which issue poses a greater risk, leaving the Federal Reserve's decision-making for the upcoming meeting uncertain [1] Inflation Insights - Current inflation in the U.S. shows both upward pressures and mitigating factors, remaining overall manageable; the core PCE year-on-year growth is expected to decrease from 2.9% in August to 2.8% in September [2] - A significant decline in housing inflation was noted in October, with rents decreasing by 0.31% month-on-month, marking the largest monthly drop in 15 years [2] - The U.S. government has recently lowered tariffs on certain food and agricultural products to alleviate consumer pressure, which may contribute to a gradual decline in overall inflation [2] Employment Trends - Despite an increase in non-farm payrolls in September, the unemployment rate rose to 4.4%, with a trend of increasing unemployment observed over the past three months [3] - The unemployment rate for college graduates aged 20 to 24 reached 8.5%, which could disproportionately impact consumer spending due to this demographic's significant contribution to the labor force and income [3] - Layoffs have surged, with companies announcing 153,000 job cuts in October, a 175.3% increase year-on-year, and total layoffs exceeding 1,099,500 for the year, a 65% increase [3] Consumer Behavior - A K-shaped recovery is evident in the U.S. economy, with high-income consumers maintaining spending while middle and low-income consumers are cutting back [4] - Credit card spending increased by 7.5% year-on-year in Q3, but the average spending among lower-income consumers has declined after adjusting for inflation [4] - Housing affordability is at a historical low, with the median income required to purchase a new car increasing from 32.8 weeks in November 2019 to 37.4 weeks in September this year [4] Monetary Policy Outlook - The risk of weakening employment is currently viewed as greater than the risk of rising inflation, suggesting a need for continued interest rate cuts to support employment and consumer spending among lower-income groups [5] - Most Federal Reserve officials support three rate cuts within the year, with a December cut seen as a baseline scenario, despite ongoing internal disagreements [5] - If consensus is not reached, the meeting may be postponed to await additional employment and inflation data from October and November [5]

Core Viewpoint - The report from CITIC Securities indicates that the U.S. September CPI was below expectations, with a moderate increase in prices of import-sensitive consumer goods, while service inflation cooled again, maintaining a stable overall inflation situation [1] Group 1: Inflation and Economic Indicators - The overall inflation environment in the U.S. remains mild, with a notable decline in service inflation [1] - If the U.S. federal government shutdown continues, the Labor Statistics Bureau may miss the sampling window for the October price data [1] Group 2: Federal Reserve Outlook - Regardless of whether the next CPI report is released on time, the current mild inflation and weakening employment conditions are expected to reinforce the anticipation of further rate cuts by the Federal Reserve [1] - The tone of the upcoming Federal Reserve meeting is likely to be dovish, with expectations of two additional rate cuts of 25 basis points each by the end of the year [1]

Core Viewpoint - The Federal Reserve Chairman Jerome Powell indicated that despite current inflation risks, the Fed may consider interest rate cuts in the coming months [1] Economic Outlook - Short-term inflation risks in the U.S. are skewed upwards, while employment risks are increasing, presenting a challenging situation [1] - The U.S. economic growth slowed to 1.2% in the first half of the year, approximately half of the expected growth rate for the same period in 2024, largely due to a slowdown in consumer spending [1] Monetary Policy - The Fed's monetary policy is not on a preset path; decisions will be based entirely on data assessments and their implications for economic outlook and risk balance [1] - The tightening policy context may require adjustments based on changes in economic prospects and risk balance [1] Market Reaction - Financial markets reacted positively to Powell's speech, with all three major U.S. stock indices rising over 1%, the dollar index falling by 0.8%, and the 10-year U.S. Treasury yield dropping by over 7.5 basis points to 4.256% [1]

Group 1 - The core viewpoint of the Federal Reserve's recent meeting minutes indicates that most officials are more concerned about inflation risks than employment market issues [1] - The July meeting resulted in a vote of 9 in favor and 2 against maintaining interest rates, marking the first time since late 1993 that two officials opposed the rate decision [1] - The minutes suggest a clear "hawkish" policy stance, which diminishes market expectations for a rate cut in the near term [1] Group 2 - Since August, expectations for a Federal Reserve rate cut have been frequently adjusted, particularly following disappointing non-farm employment data [2] - Recent inflation data, including the Producer Price Index (PPI), has shown unexpected increases, leading to a tightening of rate cut expectations [2] - As of August 21, market odds for a 25 basis point rate cut in September were at 81.2%, down from 92.1% a week prior, indicating fluctuating market sentiment [2]

Group 1 - The core viewpoint of the article is that the market's expectation for interest rate cuts has significantly cooled following the July FOMC meeting, with indications that a rate cut in September is unlikely [2][4][8] - The FOMC has maintained the federal funds target rate at 4.25%-4.50% for the fifth consecutive meeting, which aligns with market expectations, but internal divisions within the Fed have increased, with two members supporting a 25 basis point cut [2][15][16] - The statement regarding economic growth has softened, indicating a slowdown in economic activity during the first half of the year, contrasting with previous assessments of robust expansion [2][16][17] Group 2 - Powell's press conference reflected a relatively neutral stance, acknowledging a slowdown in consumer spending while indicating that consumer conditions remain healthy [3][18][20] - The labor market is described as stable, with wage growth approaching sustainable long-term levels, although the unemployment rate's stability is partly due to synchronized declines in labor supply and demand [3][18][20] - Inflation dynamics have shifted, with service sector inflation decreasing while goods inflation is rising, influenced by tariffs and the gradual impact of restrictive monetary policy [3][20][21] Group 3 - Market expectations for rate cuts have decreased, with implied cuts for the year dropping from 1.848 to 1.445 times, and the probability of a September cut falling from 68% to 47% [4][21] - The dollar index has risen, and the yield on ten-year U.S. Treasury bonds has increased, reflecting a market interpretation of Powell's statements as leaning towards a hawkish stance [4][21] - The article suggests that political pressure is not a significant factor influencing the Fed's decisions, as Powell has maintained the Fed's independence despite external pressures [5][11][12]

Group 1: Federal Reserve Decisions - The Federal Reserve decided to maintain the benchmark interest rate in the range of 4.25%-4.5%[3] - Two Federal Reserve governors voted against the decision, advocating for a 25 basis point rate cut[6] - The assessment of economic conditions was downgraded to "growth of economic activity moderated" from "expand at a solid pace"[6] Group 2: Economic Indicators - Non-farm payrolls increased by 147,000 in June, with half of the new jobs contributed by the government, indicating a slowdown in private sector job growth[7] - The labor force participation rate has declined, and wage growth is slowing, suggesting a weakening labor market[11] - Consumer spending may have started to decline, with Q2 private domestic final purchases showing the lowest annualized growth rate since Q1 2023[13] Group 3: Inflation and Market Reactions - Inflation showed signs of rebounding in June, driven by rising energy and core commodity prices, while core services inflation remained stable[11] - Following the press conference, the market's expectation for a September rate cut dropped from over 60% to below 50%[14] - The uncertainty surrounding economic prospects remains high, with short-term inflation risks persisting due to tariff policies[14] Group 4: Risks and Outlook - Risks include potential unexpected increases in U.S. inflation, tighter monetary policy from the Federal Reserve, and greater-than-expected economic downturns[15] - The overall economic outlook suggests continued slowing growth in the U.S. economy, influenced by policy and economic uncertainties[13]

Group 1: Federal Reserve Meeting Insights - The Federal Reserve maintained the federal funds target rate in the range of 4.25-4.50%, aligning with market expectations[2] - The balance sheet reduction pace remains unchanged at $5 billion in Treasury securities and $35 billion in MBS monthly[2] - The statement highlighted increased economic uncertainty, with three key adjustments made to previous language regarding economic activity and net exports[2] Group 2: Market Reactions and Economic Indicators - Market sentiment turned hawkish, with the 10-year Treasury yield initially dropping before rising, and the S&P 500 index reversing gains[2] - July's ADP employment report showed an increase of 104,000 jobs, exceeding the expected 76,000[8] - The second quarter GDP growth rate was reported at 3.0%, surpassing the market expectation of 2.6%[8] Group 3: Inflation and Tariff Impacts - Powell indicated that tariffs have a slower-than-expected impact on inflation, with core PCE expected to be 2.5% and 2.7% respectively[2] - Data from Cavallo et al. (2025) shows that U.S. import prices are rising faster than domestic prices, with significant increases in prices of goods imported from China[8] - A majority of businesses plan to pass on tariff costs to consumers within three months, indicating a potential rise in consumer prices[8] Group 4: Future Outlook and Risks - The Fed's reluctance to provide guidance on a potential September rate cut reflects a cautious stance amid economic uncertainties[8] - Risks include high uncertainty surrounding U.S. tariff policies and their impact on inflation, as well as potential downward pressure on employment exceeding expectations[8]

Group 1: Federal Reserve Policy Outlook - The Federal Reserve's upcoming meeting on July 29-30 is expected to maintain current interest rates, with a near-zero probability of a rate cut in July and less than 60% for September, primarily due to the recent CPI data indicating the inflation effects of tariffs [1] - Recent comments from Fed officials suggest a potential shift in policy considerations, with some members supporting a rate cut while others advocate for maintaining current rates due to rising inflation concerns from tariffs [1][2] - The uncertainty surrounding U.S. tariff policies is diminishing, as recent agreements with Japan and the EU suggest a potential stabilization of tariff levels, which could reduce the Fed's concerns regarding inflation and influence their decision-making [2] Group 2: Inflation Trends - Current inflation levels in the U.S. are not showing significant increases, with the June CPI data indicating a projected PCE inflation growth of 2.5% year-on-year, and core PCE at 2.7% [3] - Research indicates that excluding tariff impacts, U.S. inflation has been close to the Fed's 2% target, suggesting that the inflationary pressure from tariffs may not be as significant as previously thought [3] - If consumers absorb one-third of the new tariffs, a permanent 10% increase in tariffs could raise PCE inflation by 0.3 percentage points this year, but this effect is expected to dissipate by next year [3] Group 3: Employment and Economic Growth - Recent employment data shows signs of weakness, with only 147,000 new jobs added in June, primarily from government sectors, while private sector job growth appears stagnant [4] - The private sector's employment situation is critical for understanding economic momentum, and recent adjustments suggest that previous job growth figures may have been overestimated [4] - Economic indicators such as retail sales and PMI show stability, but sectors sensitive to interest rates, like manufacturing and real estate, are experiencing contraction, indicating a need for potential rate cuts to stimulate consumer spending [4] Group 4: Market Sentiment and Fed Independence - There is growing concern regarding the independence of the Federal Reserve, especially with external pressures from the Trump administration advocating for rate cuts [5] - A rate cut in July could be perceived as yielding to political pressure, while a refusal to cut rates when appropriate could undermine the Fed's independence [5] - The possibility of postponing a rate cut until September is being considered by some FOMC members, reflecting a cautious approach to monetary policy [5]