Core Insights - The main driver of rising yields is nominal economic growth, which is distinct from the yield increases caused by policy tightening [1] - The Federal Reserve is likely to maintain current policy rates for an extended period, as indicated by Boston Fed President Susan Collins [1] - The uncertainty surrounding the December meeting outcomes is heightened due to a lack of official economic data, exacerbated by the government shutdown [1] Summary by Sections Federal Reserve Policy - Susan Collins emphasized that further easing should have a "high threshold" and suggested that policy rates may remain unchanged for a while [1] - Fed Vice Chairman Jefferson highlighted the need for caution as the Fed approaches neutral rates, indicating that the lack of data makes it prudent to be cautious [1] - There are currently 6 voting members supporting the maintenance of rates, while only 3 are in favor of a rate cut, with 3 non-voting members taking a wait-and-see approach [1] Market Reactions - The market's shift in expectations for rate cuts is driven more by the absence of data rather than positive economic indicators [1] - The current environment is characterized by a hawkish tilt in the Federal Open Market Committee's (FOMC) response mechanism, despite a lack of positive adjustments in economic outlook [1] - Risk assets are feeling uneasy due to this hawkish sentiment, contrasting with the ideal scenario of a dovish Fed and a strong economy [1] Economic Indicators - The stock market's recent performance has been supported by a loose Financial Conditions Index (FCI) and AI-related stocks [1] - A tightening FCI driven by hawkish tendencies, coupled with rising real yields, could lead to challenging times ahead for the market [1]