Core Viewpoint - The recent decline in gold prices following the Federal Reserve's interest rate cut on September 18 raises questions about the expected negative correlation between gold and the US dollar, as the dollar weakened but gold did not rise as anticipated [1][3]. Group 1: Market Analysis - The market had high expectations for a larger rate cut of 50 basis points, but the actual cut was only 25 basis points, leading to a shift from bullish to bearish sentiment regarding gold [1][3]. - The Federal Reserve's cautious approach to the rate cut, described as risk management, contributed to the drop in gold prices [3]. Group 2: Economic Factors - Global central banks, including China, have engaged in significant monetary expansion, with China's M2 money supply increasing from 60 trillion yuan in 1995 to over 300 trillion yuan today, highlighting the inflationary pressure on fiat currencies [4]. - The limited supply of gold compared to the unlimited production of paper currency suggests that gold will retain its value as paper currency depreciates, indicating a loss of confidence in fiat money [4]. Group 3: Dollar Dynamics - The US dollar's dominance is being challenged as many countries seek alternatives, with US debt reaching 37 trillion dollars and concerns about the sustainability of this debt growing [5]. - Continuous interest rate cuts are expected to lead to further depreciation of the dollar, which could ultimately support an increase in gold prices as investors seek to hedge against currency devaluation [5][6]. Group 4: Investment Perspective - In the current economic environment, gold is viewed as a reliable store of value compared to other investment options, as confidence in fiat currencies diminishes [6]. - The decision to invest in gold versus holding cash depends on individual circumstances, but gold is recommended as a hedge against inflation [6].

Group 1 - The Federal Reserve lowered the federal funds rate target range by 25 basis points to 4.00%-4.25%, marking its first rate cut since December 2024, described by Powell as a "risk management" move rather than a shift to a sustained easing cycle [1][3] - The U.S. labor market is showing signs of slowdown, with non-farm payrolls increasing by only 22,000 in August, significantly below the expected 75,000, and the unemployment rate rising from 4.2% to 4.3% [1][2] - The labor supply is decreasing due to immigration policies, which may mask the true decline in labor demand, leading to a "low hiring, low firing" environment [2] Group 2 - Inflation risks remain, with the Personal Consumption Expenditures (PCE) price index rising by 2.7% over the past 12 months, and core PCE increasing by 2.9%, influenced by rising goods prices while service price inflation slows [3] - Despite the rate cut, the Fed's contradictory stance on predicting economic growth and inflation increases has led to market confusion [3] - International capital is seeking "safe havens," with China being a primary destination, as foreign investors injected nearly $45 billion into emerging market stocks and bonds in August, with about $39 billion directed towards China [4] Group 3 - The narrowing of the interest rate differential between the U.S. and China may lead to increased capital inflows into China, potentially boosting the RMB exchange rate [4] - China's monetary policy needs to be cautious in response to the narrowing interest rate differential, as further rate cuts could pressure bank margins and increase risk appetite among banks [4] - The low interest rate elasticity of consumption and investment in China suggests that rate cuts may not effectively stimulate these sectors, necessitating careful consideration of both international and domestic liquidity conditions [4]

Core Viewpoint - The Federal Reserve announced a 25 basis point cut in the federal funds rate to a range of 4.00%-4.25%, marking the first rate cut of the year, aligning with market expectations [1][2]. Group 1: Federal Reserve's Monetary Policy - The Fed's dot plot indicates the possibility of two more rate cuts by the end of the year, each by 25 basis points [1][2]. - Fed Chairman Jerome Powell described the rate cut as a "risk management" decision, emphasizing the need to respond to a cooling labor market [1][3]. - The Fed's economic forecast report slightly upgraded GDP growth predictions for 2025 and 2026 to 1.6% and 1.8%, respectively, both up by 0.2 percentage points from June [2]. Group 2: Employment and Inflation Outlook - The Fed is prioritizing employment over inflation, indicating a higher tolerance for inflation in the short term [2][3]. - The projected unemployment rate remains stable at 4.5% for 2025 and 4.4% for 2026, unchanged from previous forecasts [2]. Group 3: Internal Disagreements and Future Projections - There is significant division among Fed officials regarding future rate cuts, with 9 out of 19 voting members supporting two more cuts, while others are more cautious [3][5]. - The dot plot reflects a lack of consensus, with some members advocating for only one additional cut or none at all [5][6]. - The Fed's decision-making process is reportedly unaffected by political factors, as emphasized by Powell [6][7].

Core Viewpoint - The U.S. stock market has shown resilience since early April, but high valuations suggest an increased probability of sideways movement and a slowing upward trend [1][6]. Economic Outlook - The labor market is experiencing a substantial slowdown, while inflation remains steady, leading the Federal Reserve to shift its focus from preventing inflation to balancing employment [5]. - The Federal Reserve's recent decision to lower interest rates by 25 basis points was nearly unanimous, with only one dissenting vote, reflecting a temporary alleviation of concerns regarding internal divisions within the Fed [5]. - Economic projections have been adjusted, with GDP growth expectations for the end of the year raised by 0.2 percentage points to 1.6%, while PCE inflation and unemployment rate expectations remain unchanged at 3% and 4.5%, respectively [5]. Market Implications - The Fed's decision to lower rates is seen as a response to the cooling labor market, but the anticipated rate cuts may not be as aggressive as the market currently expects [6]. - U.S. Treasury yields are expected to decline as the current fiscal policy under the Trump administration emphasizes fiscal dominance with supportive monetary policy [6]. - The U.S. stock market is likely to experience continued high volatility, with current valuations being elevated, leading to an increased likelihood of sideways trading and a slowing rate of increase [6].

Core Points - The Federal Open Market Committee (FOMC) announced a 25 basis point interest rate cut, lowering the federal funds rate from 4.25%-4.50% to 4.00%-4.25%, marking the first action since December of the previous year [3] - Market reactions were volatile, with major U.S. stock indices initially rising before sharply declining, and the U.S. dollar index hitting a new low since 2025 before rebounding [3] - Fed Chairman Jerome Powell's comments indicated a cautious approach to rate adjustments, framing the cut as a risk management measure [3] - The FOMC highlighted increased downside risks to employment and described economic activity as slowing, with inflation remaining relatively high [3] - The dot plot indicated expectations for two more rate cuts by the end of the year, with one dissenting opinion advocating for a 50 basis point cut [4][5] Market Analysis - Gold prices experienced a significant drop following the FOMC announcement, trading around $3,660 after peaking at $3,706 [1][5] - Technical analysis suggests that after reaching new highs, gold is now in a corrective phase, with potential for further fluctuations depending on market strength [5]

Monetary Policy - The Federal Reserve's recent action is characterized as a risk management type of rate cut, with limited support for a 50 basis point cut [1][3] - The target range for the federal funds rate has been lowered from 4.25%-4.5% to 4.00%-4.25%, marking the first rate cut of the year [2][3] - The median forecast for the federal funds rate is projected to be 3.6% by the end of this year, lower than previous estimates [6] Labor Market - Revised employment data indicates a weakening labor market, with the unemployment rate rising to 4.3% and job growth slowing significantly [3][4] - The average monthly increase in non-farm jobs has dropped to 29,000, suggesting a decline in labor demand [3][4] - The Federal Open Market Committee (FOMC) predicts the unemployment rate will reach 4.5% by the end of this year [4] Inflation - The inflation rate is projected to rise, with the overall Personal Consumption Expenditures (PCE) index expected to increase by 2.7% year-on-year [4][5] - Core PCE inflation is anticipated to rise by 2.9%, with tariffs contributing approximately 0.3-0.4 percentage points to core PCE inflation [5][33] - Long-term inflation expectations remain stable, with the FOMC members forecasting a decline to 2.1% by 2027 [5][6] Economic Growth - The U.S. GDP growth rate for the first half of the year is estimated at 1.5%, down from 2.5% the previous year, primarily due to a slowdown in consumer spending [3][4] - The FOMC's median forecast for GDP growth is slightly adjusted to 1.6% for this year and 1.8% for next year [3][6] Tariffs - The impact of tariffs on inflation is diminishing, with the potential for "tariff inflation" being less persistent than previously thought [1][5] - Tariffs have been identified as a factor influencing both inflation and the labor market, with companies absorbing some of the tariff costs [8][33] Federal Reserve Independence - The Federal Reserve emphasizes its commitment to maintaining independence, despite external political pressures [1][8] - Discussions regarding the independence of the Federal Reserve are deemed inappropriate in the context of ongoing legal matters involving board members [1][8]