A senior Fed official said that the Fed should resume "gradual" interest rate cuts after an unusually sharp 50 basis points cut earlier this month. Moussalem told the Financial Times last Friday: "For me, the measure to cut interest rates is to relax the brakes on the economy at this stage and let the policy gradually reduce restrictions." Less than two weeks ago, the Federal Reserve abandoned the more traditional interest rate cut of 25 basis points to cut interest rates by 50 basis points to start the first easing cycle since the COVID-19 outbreak in early 2020. This huge interest rate cut will keep the federal funds rate between 4.75% and 5%. Federal Reserve Chairman Powell said that the move is aimed at maintaining the strength of the world's largest economy and avoiding a weak labor market when inflation falls. Moussalem supported a sharp interest rate cut in September. He admitted that the labor market had cooled down in recent months, but he was still optimistic about the prospects given the low rate of layoffs and the potential strength of the economy. He said that the business sector is in a "good condition" and business activities are generally "stable", adding that mass layoffs do not seem "imminent". This echoed the comments made by Federal Reserve Governor Waller last week, saying that if the data weakened faster, he would be "more willing to actively cut interest rates". Musalem said that the risk of economic weakness or excessive growth has now been balanced, and the next interest rate decision will depend on the data at that time. However, officials have different views, with two suggesting that the Fed should postpone further interest rate cuts, while the other seven predict that it will only cut interest rates by 25 basis points this year. Policymakers also predict that the policy interest rate will drop by another 100 basis points in 2025, ranging from 3.25% to 3.5% by the end of the year, and slightly below 3% by the end of 2026. He said: "It is appropriate to send a strong and clear message to the economy that we are starting from a very favorable position."

Central banks cut interest rates in turn, and China's "policy spree" ignited global optimism. European stock markets closed at a new high on Friday. The pan-European Stoxx 600 index closed up 0.47% to a new high, the German stock index rose 1.7% to a new high, luxury goods stocks jumped, and LVMH and kering both rose nearly 10%. Since the beginning of this year, European stocks have been strong and hit record highs. However, for the follow-up trend of European stocks, the fund managers of Goldman Sachs Group, BlackRock and Northern Trust Asset Management Company expressed concern that the rise of European stocks is facing severe challenges. They warned that investors need to be alert to the economic downturn in Europe and its impact on corporate profits. In addition, the variables in the US election have added new uncertainties to the market. With the entry into the last quarter in 2024, the market sentiment is increasingly turbulent. The strong gains of European stocks in the first half of the year have turned into frequent fluctuations in the past few months. Europe's inflation has cooled but the economy has shrunk, and the stock market has insufficient motivation to rise. The weak European economy is in stark contrast to the record high of the stock market in this region. Although inflation has further cooled down and the inflation rate in France and Spain has fallen below 2%, private sector activities in the euro zone have shrunk this month, and the risk of economic recession in Germany has become more and more prominent. In September, the comprehensive PMI of the euro zone dropped to 48.9, which was lower than that of threshold for the first time since February this year. Both Germany and France accelerated their contraction. The initial value of Germany's comprehensive PMI declined for the fourth consecutive month. The French service industry fell back into contraction, and manufacturing sales dropped significantly. Northern Trust Asset Management Co., Ltd. lowered its allocation of European stocks from overweight to neutral this week due to concerns about the macroeconomic prospects. Anwiti Bahuguna, chief investment officer of the company's global configuration, pointed out: Economic data is unstable. Although inflation has declined, it is not enough to support a sharp interest rate cut. The current market environment is not suitable for taking too high risks. The US election adds uncertainty. Since the European benchmark index hit an all-time high in May, it has repeatedly failed to break through this resistance level, indicating that this point is still a key obstacle to the market. The analysis pointed out that if Trump wins in the US election, it may have a major impact on the income of European companies. Barclays strategists warned that if this triggered the "trade friction" between Europe and America, the profit growth of European companies would be significantly dragged down, especially the German and Italian stock markets, as well as capital goods, automobiles, technology and other industries. The political uncertainty in France has also put pressure on the stock market in this region. The performance of the Paris market is inferior to other major stock indexes, and investors have doubts about the stability of the new government. Helen Jewell, chief investment officer of BlackRock's basic stocks in Europe, Middle East and Africa, said that European stocks are currently in a highly sensitive stage: The results of the US election are unpredictable, the macroeconomic outlook is also full of uncertainty, and the fragility of the market may continue until 2025. The key to the trend of European stocks lies in corporate profits. Strategists at Barclays and Citigroup said that China's policy measures may have a positive impact on cyclical stocks such as mining, automobile manufacturing and consumer goods. According to the analysis, China's recent stimulus policy may be the key to promote STOXX Europe 600 Index's rise at the end of the year. After all, about 8% of the index's income comes from China. However, Gilles Guibout, head of European stocks at AXA Investment Bank, reminded that the key to the future trend of European stocks will be corporate profitability. He said: Ultimately, the future direction of the market will depend on the company's earnings performance to be announced soon. The third-quarter results to be announced by European companies in mid-October are crucial for assessing the impact of the European economic slowdown on consumer demand. Analysts in JPMorgan Chase warned that sales of Novo Nordisk's best-selling diet drug Wegovy may be lower than expected, which may be one of the early signs of the performance trend this quarter. At the same time, Sweden's H&M also said that its key profit target is difficult to achieve, and the prospect of the retail industry is increasingly worrying. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

According to data compiled by Bloomberg, Bitcoin rose by more than 10% this month, while in the past decade, it fell by an average of 5.9% in September. The small currency index rose by more than 20%. Sean McNulty, trading director of Arbelos Markets, said: "As far as the Fed is concerned, the correlation between Bitcoin and monetary policy is still the highest. The easing policies of other central banks certainly help. " Caroline Mauron, co-founder of Orbit Markets, said that since a large number of option contracts will expire on Friday, the level of $65,000 may prove to be "firm" in a few hours. In addition, the US presidential election may also boost digital assets. The market expects that within a few months after the election, the regulation of cryptocurrency in the United States will be clearer, which will boost market sentiment. The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

On Thursday, September 26th, Beijing time, the Swiss National Bank announced the latest interest rate resolution, announcing that the benchmark interest rate would be lowered by 25 basis points to 1.00%, which was the third consecutive rate cut, in line with market expectations. Driven by the geopolitical crisis, the Swiss franc exchange rate has continued to rise since the middle of this year. The statement said that it will be prepared to intervene in the foreign exchange market if necessary. In the past quarter, inflation pressure in Switzerland has slowed down significantly, and economic growth has recovered moderately. At the same time, Switzerland's GDP grew steadily in the second quarter, and the overall capacity interest rate remained at a normal level, indicating a steady economic recovery. It is estimated that the average annual inflation rate will be 1.2% in 2024, 0.6% in 2025 and 0.7% in 2026. Risk warning and exemption clause

The core PCE price index, the Fed's favorite inflation indicator, will be released on Friday night, and this data will provide further key clues for the Fed to cut interest rates. It is widely expected that the PCE price index in the United States will fall back to 2.3% in August, the lowest level since the beginning of 2021, but the core PCE price index will increase by 0.1% to 2.7% compared with July. Economists believe that the rise in core inflation stems from the unexpected rise in housing costs, but the current rent and housing prices tend to be stable, and inflation in major areas except housing has eased. Therefore, the inflation index in August may support the Fed to cut interest rates further. On the other hand, investors are quietly preparing for the return of inflation, thinking that the road to "fighting inflation" has a long way to go. The data shows that investors' average inflation expectation for the next five years is 2.04%, which is higher than 1.86% at the beginning of the month. The loose pace of the Fed's interest rate cut by 50 basis points a few days ago may rekindle the inflation risk in the second half of the year. According to the latest survey by Bloomberg: In August, the PCE price index of the United States is expected to increase by 2.3% year-on-year, or it will hit the lowest level since the beginning of 2021, down by 0.2 percentage points from the previous value of 2.5%, and the month-on-month increase is expected to drop from 0.2% in July to 0.1%. The core PCE price index is expected to increase by 2.7% year-on-year, 0.1 percentage point higher than the previous value of 2.6%, and the chain-on-chain increase is expected to remain unchanged at 0.2%. Housing cost "exaggerates" inflation? August data may support further interest rate cuts. The market expects the US PCE price index to fall back to 2.3% in August, hitting the lowest level since the beginning of 2021. Some economists even predict that the Fed will achieve its 2% inflation target in January or February next year. Gregory Daco, chief economist of Parthenon-Ernst & Young, said: We expect PCE to be around 2.5% by the end of the year, and then close to the Fed's 2% target in early 2025. On the other hand, however, the market expects core inflation to rise in August: the core PCE price index is expected to rise from 2.6% to 2.7% in August. In this regard, some economists explained that the most likely reason for the rising source of inflation was the unexpected sharp increase in housing costs last month. However, recent trends show that rents and house prices have stabilized, and inflation may slow down further in the coming months. Some senior Fed officials, including Federal Reserve Chairman Powell, believe that the housing index exaggerates the inflation rate in the United States. And housing is the largest component of the main inflation index of the US government. According to the analysis, inflation has eased in most areas except housing. The upcoming PCE inflation indicator data may show that inflation has cooled down and support the Fed to cut interest rates further. As long as rents continue to fall, Fed officials are prepared to ignore the expensive housing costs to better understand the potential inflation rate. Nationwide economists wrote in a report: Although there may be some bumps along the way, at present, inflation seems to be moving towards the Fed's 2% target. However, investors are quietly preparing for the return of inflation. The current market worries about the resurgence of inflation have not been eliminated. As of Tuesday, both inflation swaps and Treasury inflation-protected securities indicated that inflation may hover above the Fed's 2% target in the next few years. According to the latest data from the St. Louis Federal Reserve, the five-year break-even inflation rate in the United States (reflecting investors' expectations for the average inflation rate in the next five years) recently climbed to 2.04%, and earlier this month, this indicator hit a nearly four-year low of 1.86%. The inflation swap market has also shown a similar trend. According to Tradeweb data, as of Tuesday, the inflation rate of one-year swaps linked to the overall CPI was 2.028%, while that of five-year swaps was 2.333%, both of which were higher than the lows in September. The Federal Reserve lowered its policy interest rate target by 50 basis points last week, further relaxing monetary policy. Tim Murray, a capital market strategist at T. Rowe Price, said that inflation may reignite in the second half of this year: They prefer to gradually reduce inflation to avoid economic recession, but this road means that inflation risks still exist. Not only will inflation take longer to subside, but it may be rekindled with the arrival of the second half of the year. Even some senior Fed officials are worried that inflation has not been completely defeated. Bowman, the only Fed governor who voted against it last week, pointed out in a statement that such a dramatic first rate cut may unnecessarily restore inflationary pressure. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

On Tuesday, the Reserve Bank of Australia (the central bank) announced the latest interest rate resolution, announcing that the key interest rate level would be maintained at 4.35%, in line with market expectations. The monetary policy statement pointed out that although Australia's inflation has fallen sharply since its peak in 2022, it is still above the upper limit of the target range. The inflation target may be postponed, paying attention to the long-term downward trend of inflation. In terms of employment, Australia's labor market has maintained a good momentum, and the unemployment rate has stabilized at a historical low of 4.2%. Stephen Spratt, interest rate strategist at Societe Generale in Hong Kong, commented: "This seems to be a signal to the market, that is, don't read too much about tomorrow's August CPI data, although it is expected to fall back to the target range." Judging from the statement, the Reserve Bank of Australia has confidence in the fight against inflation, and it is expected that inflation indicators will remain an important reference for the monetary policy path in the future: "The policy needs to take enough restrictive measures until the Committee is convinced that inflation can move towards the target range in a sustainable way." The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

With the Federal Reserve opening its easing cycle for the first time in four years, the stock market's interest rate cut trading manual has changed? Generally speaking, when the Fed cuts interest rates to boost the economy, investors tend to choose defensive stocks and high dividend stocks to avoid growth stocks, including the technology industry, which are easily affected by the macro-economy. However, due to the resilience of the US economy at the time of this interest rate cut, the interest rate cut has brought about a rise in technology stocks, a record high in the stock market, sustained economic growth and a better profit prospect for enterprises. Judging from the flow of funds after the interest rate cut, investors are shifting from defensive stocks to cyclical stocks. According to the data of Goldman Sachs Group's bulk brokerage business, last week, hedge funds bought TMT shares (technology, media, communications) for the third consecutive week, and their net positions reached the largest in four months. At the same time, defense stocks showed the largest net selling in more than two months, and the outflow of funds from public utilities stocks reached the largest scale in more than five years. Frank Monkam, senior portfolio manager of Antimo, said: "The Fed chose to cut interest rates sharply in a fairly relaxed financial environment, which is a clear signal to the market that it should take an offensive position." "Traditional defensive stocks, such as utilities or consumer stocks, may not be very attractive." Why is this interest rate cut different from history? Why is this rate cut a "non-recession rate cut"? According to the data of Bank of America, eight of the nine easing cycles since 1970 occurred when corporate profits slowed down. However, Savita Subramanian, head of the bank's stock and quantitative strategy, wrote in a report to clients: The current situation is that profits are expanding, which is beneficial to cyclical stocks and large-cap stocks. This means that the Fed didn't cut interest rates out of recession, Subramanian said: "The Fed doesn't have a script—every easing cycle is different." However, judging from the historical interest rate cut cycle, every time the Fed cuts interest rates, it will often drive the overall market to rise. According to Bank of America data, in the absence of recession, since 1970, S&P has risen by an average of 21% in the year after the Federal Reserve cut interest rates for the first time. Investment style switching: banking, technology and real estate are sought after. So, what kind of investment style did the Fed's "non-recession interest rate cut" bring? As Subramanian said, investors are turning to cyclical stocks, large-cap stocks and other growing industries. Thanks to the stimulating effect of the relaxed environment on consumption, industries such as real estate and automobiles are also expected to achieve growth. Phil Blancato, CEO of Ladenburg Thalmann Asset Management, said: "You will see excited consumers-the decline in mortgage interest rates will stimulate consumption, both in the housing market and the automobile market." Utility stocks in traditional trading strategies also continue to be hot, because the AI investment boom has increased the attractiveness of the industry. In fact, utility stocks have risen by 26% this year, making them the second best performing sector in S&P.. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

However, Jeffrey Jaensubhakij, chief investment officer of GIC, Singapore's sovereign wealth fund, warned that the market boom after the Federal Reserve cut interest rates sharply on Wednesday may be just a flash in the pan, given the rising inflation risk. At the Asia Summit of milken Research Institute in 2024, he said: Jaensubhakij pointed out that as the US election approaches, politicians may launch unnecessary stimulus measures to win votes. He also mentioned that many companies supported by GIC need to borrow money and hope to see further interest rate cuts. To some extent, the signal from the bond market is that interest rates need to fall as sharply as they are about to enter a recession. On the other hand, the stock market thinks that the economy will accelerate again and corporate profits will pick up. Only one of the two is right. As for the surge of US stocks on Thursday, some analysts believe that the data of US initial jobless claims released on the same day unexpectedly fell to a four-month low, which enhanced investors' confidence in the Fed's "soft landing" of the economy. Tom Lee, one of the most optimistic bulls on Wall Street and the research director of Fundstrat Global Advisors, also believes that the Fed's interest rate cut cycle has laid the foundation for the strength of US stocks in the next one to three months. However, with the approach of the US presidential election in November, it is not entirely believed that US stocks will continue to rise, and there is still great uncertainty about the trend of US stocks. The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

The central bank's interest rate cut will usually drive the local currency to weaken. For the central banks of emerging market countries, starting to cut interest rates before the Fed cuts interest rates may lead to the devaluation of their own currencies, the decline in investment attractiveness, the rise in import prices and thus the inflation. At present, the central banks in Southeast Asia are on the verge of a rate cut cycle. Wall Street has previously mentioned that the local market prospects are generally optimistic because central banks in Southeast Asia have more room to relax monetary policy. The real interest rate in Southeast Asian countries is higher than a year ago, and there is room for further interest rate reduction, which is good news for the local bond market. In addition, the valuation advantages and cheap labor costs in Southeast Asia also provide positive prospects for the local market. The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

In September, the interest rate decision is about to come to the table, and the market is full of voices. Traders' attitude towards the first rate cut of 25 basis points or 50 basis points continues to be divided. Jeffrey Gundlach, the founder of DoubleLine Capital and the new creditor, also joined the debate on the scale of interest rate cuts, and bet that the Fed will start its interest rate cut cycle by cutting 50 basis points at the interest rate meeting on Wednesday. The market speculated that the Fed was preparing to cut the benchmark interest rate quickly to prevent economic stagnation. This expectation has promoted the trend of the bond market, and the yield of two-year US Treasury bonds has fallen below 3.6%, which is about 1.75 percentage points lower than the target interest rate of the Federal Reserve. Up to now, the yield of US two-year treasury bonds is reported at 3.596%. Gundlach thinks the Fed should narrow this gap. He predicted that the Fed is likely to cut interest rates by 50 basis points this time, with a total reduction of 125 basis points by the end of the year. On Tuesday, he told the Future Proof conference in California that the US economy has fallen into recession and the Federal Reserve has maintained a tightening policy for too long: "I think they will cut interest rates by 50 basis points. The Fed is' far behind the curve' and they should act quickly." Traders, on the other hand, believe that the possibility of cutting interest rates by 50 basis points is about 55%. According to data released by the United States on Tuesday, retail sales unexpectedly rose in August, while employment data in August also showed a weak trend, recruitment slowed down significantly, and the unemployment rate rose to the highest level of 4.3% in the past three years. Gundlach said that he gave the Fed an "F" rating, adding that "they should have cut interest rates earlier ... I have seen many layoffs and the United States has fallen into recession." Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.