Core Viewpoint - The Federal Reserve's recent interest rate cut was accompanied by hawkish signals from Chairman Powell, indicating uncertainty in future monetary policy and dampening market expectations for further rate cuts by year-end [2][4]. Group 1: Interest Rate Decision - The Federal Reserve lowered the benchmark interest rate by 25 basis points, bringing the target range to 3.75% to 4%, the lowest level in three years, marking the second consecutive meeting with a rate cut [2]. - Powell's comments shifted market sentiment, reducing the probability of a December rate cut from 95% to 65%, leading to declines in major stock indices [2][6]. - The voting outcome for the rate decision was 10 in favor and 2 against, highlighting significant internal divisions within the FOMC [5]. Group 2: Internal Disagreements - Powell noted a growing chorus of officials questioning the necessity of further rate cuts, suggesting that the most accommodative phase of the current easing cycle may be over [4][5]. - The differing opinions among committee members were evident, with some advocating for maintaining rates while others pushed for a more substantial cut [5]. Group 3: Economic Data and Uncertainty - The government shutdown has created a data vacuum, complicating decision-making and increasing uncertainty regarding economic forecasts [7][8]. - The absence of key labor market indicators has left officials without the necessary information to resolve their differences, leading to a wider range of uncertainty [8]. Group 4: Inflation and Employment Dynamics - The debate within the Fed centers on balancing inflation control with addressing economic slowdown, with concerns about overheating the economy through excessive rate cuts [11]. - Recent labor reports indicate a significant slowdown in job growth, with average monthly additions dropping to approximately 29,000, far below last year's average of 82,000 [11].

Core Viewpoint - The market anticipates a 25 basis point rate cut by the Federal Reserve, with Chairman Jerome Powell unlikely to provide guidance due to increasing divergence among decision-makers regarding future interest rate paths [1] Group 1 - Powell indicated that the Federal Open Market Committee will continue to focus on threats to the labor market [1] - Recent inflation reports have been weaker than expected, potentially dampening hawkish sentiments within the Federal Reserve regarding inflation issues [1] - Labor data is playing a more significant role in the ongoing debates among officials [1] Group 2 - As long as officials are satisfied with inflation expectations and the levels of wage and service price pressures, Powell can maintain a focus on employment issues [1] - This approach allows the Federal Reserve to return to a neutral policy stance [1]

Core Viewpoint - The Federal Reserve is expected to lower interest rates for the second consecutive time to support a weakening job market, but there may be internal opposition regarding the continuation of this easing cycle beyond October due to inflation concerns [1][3]. Group 1: Federal Reserve's Actions and Market Reactions - The latest CPI data shows that the core inflation rate in the U.S. reached a three-month low in September, reinforcing the Fed's plan to cut rates this week, although the overall stagnation in price reduction does not justify further rate cuts in the future [1][3]. - The interest rate futures market has fully priced in a 25 basis point cut this week, another cut in December, and potentially another in March next year, indicating strong market expectations for continued easing [4][5]. - The U.S. Treasury market, valued at $29 trillion, has seen exceptional returns this year, likely achieving its best annual performance since 2020, driven by expectations of further rate cuts [4]. Group 2: Internal Disagreements within the Federal Reserve - Despite market expectations for a total of 50 basis points in cuts over the next two meetings, there are concerns among some Fed officials about the appropriateness of such aggressive market pricing [5]. - A group of regional Fed presidents may voice dissent regarding the rate cuts, with a significant number of policymakers indicating a preference for no further cuts after September [5][7]. - Officials express renewed concerns about inflation, particularly regarding the long-term stability of inflation expectations, which could pose risks to monetary policy credibility [7][8]. Group 3: Labor Market and Economic Outlook - The labor market has shown signs of significant softening, with recent data not providing much positive signal, leading to a cautious approach towards further rate cuts [3][8]. - The current job growth rate is close to the level needed to maintain stable unemployment, indicating a potential mismatch between economic growth and labor market conditions [5][8]. - The absence of official data during the government shutdown complicates the Fed's policy decisions, leading to a continuation of the previously established policy path without clear dovish signals [8].

Core Viewpoint - The Euro/USD exchange rate is currently hovering just below the 1.1650 level, having moved away from recent lows of 1.1540, amidst a moderately bullish market environment [1] Group 1: Market Conditions - Despite the escalation of the US-China trade war and ongoing volatility, the Euro/USD remains "heavy" and lacks a clear directional trend [3] - The possibility of the Euro breaking strongly above 1.20 still exists, but the current conditions do not support this [3] - The stock market continues to reach new highs, creating a significant paradox as investors remain cautious and avoid making large bets in the forex market [3] Group 2: Economic Indicators - The likelihood of the Federal Reserve lowering the benchmark interest rate again is high, but the next steps remain unclear due to inflation concerns and potential escalation of tariff issues [3] - The US labor market continues to face challenges, which is one of the main issues currently [3] Group 3: Currency Trends - The dollar has regained dominance and tested the 1.15 level, confirming previous analyses that favored the dollar [3] - However, a significant rebound for the dollar may not be feasible at this time, as breaking below the 1.10 level seems unlikely [3] - The exchange rate is expected to continue consolidating around current levels in the coming weeks [3] Group 4: Upcoming Events - Notable speeches from Federal Reserve officials are on today's agenda, as there are no significant macroeconomic data releases [3] - The preference is to maintain current levels without significant changes [3]

Group 1 - Discussion among Federal Reserve officials regarding the extent of interest rate cuts [1] - Examination of the economic situation, particularly focusing on employment and inflation issues [1] - Deliberation on tariffs and fiscal policy [1]

Core Viewpoint - The Federal Reserve must maintain its credibility on inflation while balancing various objectives [1] Summary by Relevant Categories Federal Reserve's Position - The Federal Reserve, represented by Schmied, emphasizes the importance of credibility in managing inflation [1]

Core Viewpoint - Federal Reserve officials are unable to shift their focus away from inflation issues [1] Group 1 - The ongoing concern regarding inflation remains a primary focus for Federal Reserve officials [1]

Market Commentary - The Federal Reserve has lowered interest rates by 25 basis points, with officials subsequently commenting on the decision [2] - Federal Reserve Governor Stephen Milan emphasized the necessity of significant rate cuts in the coming months to protect the labor market, citing that current rates are too high [2] - Milan's speech marked his first policy address since being appointed by Trump, where he discussed the decline of the neutral interest rate due to factors like tariffs, immigration restrictions, and tax policies [2] - Cleveland Federal Reserve Bank President Beth Harmack expressed ongoing concerns about inflation, warning that officials should remain vigilant during rate cuts to prevent economic overheating [2] - Harmack noted that inflation has been above the Fed's 2% target for over four years, and it may take several more years to return to the target level [2] Stock Market Activity - The Hong Kong Stock Connect recorded a net inflow of HKD 12.7 billion on Monday, with the Tracker Fund of Hong Kong (02800.HK) seeing the highest net inflow of HKD 2.86 billion [2] - Alibaba (09988.HK) followed closely with significant net inflows, while Meituan (03690.HK) experienced the largest net outflow, amounting to HKD 385 million [2]

Core Viewpoint - The U.S. job growth has significantly slowed down since the beginning of the year, as indicated by the August non-farm employment report, which shows a clear decline in new job additions [1][5]. Group 1: Employment Data - In August, U.S. employers added 22,000 jobs, with the private sector contributing 38,000 jobs, while the unemployment rate rose to 4.3%, the highest level since 2021 [5]. - The job growth data for June was revised downwards, showing a decrease of 13,000 jobs, while July's data was revised upwards from 73,000 to 79,000 jobs [5]. - Over the past three months, the private sector averaged 29,000 new jobs per month, marking the lowest increase since the pandemic began [6]. - The average number of new jobs in the private sector over the past six months has slowed to 67,000 [6]. - The number of permanent job losses slightly increased in August, but the rate has remained stable this year, at just above 1.1% of the labor force [9]. Group 2: Federal Reserve and Economic Indicators - The Federal Reserve is expected to lower interest rates by 0.25 percentage points in the upcoming meeting, complicating discussions about future rate cuts [2]. - Fed Chair Powell indicated that if labor market data shows a slowdown, the Fed will proceed with planned rate cuts, reflecting a shift in the balance of risks [2][4]. - The comprehensive weekly wage index rose by 4.4% year-on-year in August, marking a new low for this cycle, with a three-month annualized growth rate declining from 3.2% to 2.4% [11]. - The unemployment rate, calculated without rounding, increased from 4.248% in July to 4.324% in August, with Fed officials previously predicting it would rise to 4.5% in the fourth quarter [14].

Core Points - President Trump dismissed Federal Reserve Governor Lisa Cook on August 25, citing alleged mortgage fraud, leading Cook to file a lawsuit against Trump claiming he lacked the authority to terminate her [1][4] - The lawsuit alleges that Trump's actions violated Cook's due process rights under the U.S. Constitution, as she was not notified or given a hearing prior to her dismissal [1][4] Group 1 - Lisa Cook became the first Black woman member of the Federal Reserve Board in 2022 and was nominated by former President Biden to serve until 2038 [4] - Since 2025, Cook has expressed concerns about U.S. inflation, suggesting that tariffs could exacerbate inflationary pressures [4] - Trump's dissatisfaction with the Federal Reserve has been ongoing, as he has repeatedly called for interest rate cuts and even threatened to "fire" Fed Chair Powell [4] Group 2 - This incident marks the first time in over a century that a president has dismissed a Federal Reserve governor, indicating a significant escalation in Trump's conflict with the Federal Reserve [4]