Next week's heavy schedule: Will the MLF in September "cut interest rates"? Major US inflation indicators, Powell and other senior officials from the Federal Reserve will speak intensively

A summary of major financial events from September 23rd to September 29th, all in Beijing time:

Key focus this week: China's September Medium-term Lending Facility (MLF) continuation, US August PCE Price Index, speeches by several Federal Reserve officials including Powell.

In addition, the US will release the final annualized quarter-on-quarter GDP and PCE Price Index for the second quarter, August durable goods orders, initial PMI values for September from various countries, and the official start of the Japanese leadership election.

China's September MLF Continuation

On Wednesday (September 25th), the People's Bank of China will conduct a 591 billion yuan Medium-term Lending Facility (MLF) continuation.

The People's Bank of China announced that on September 18th, the central bank conducted 568.2 billion yuan of reverse repurchase operations at a fixed rate through quantity bidding, with a bid rate of 1.70%, consistent with previous levels. In addition, the 591 billion yuan MLF maturing on the same day will be continued on September 25th.

Following the Federal Reserve's first 50 basis point rate cut in four years, China's September Loan Prime Rate (LPR) remained unchanged. Analysts from Minsheng Securities pointed out that overseas rate cuts are a "necessary but not sufficient" condition for domestic monetary easing, and historical data indicates that domestic monetary easing may lag slightly behind international actions. It is expected that domestic reserve requirement ratio cuts, reductions in reverse repurchase/MLF rates may come first, followed by adjustments in existing home loan rates, with LPR cuts and existing home loan rate adjustments not being "stacked" within the year.

Securities Daily believes that the unchanged LPR in September is partly due to the unchanged 7-day reverse repurchase rate and the continued pressure on net interest margins for commercial banks, limiting the short-term downward adjustment of LPR quotes.

Wang Qing, Chief Macro Analyst at Orient Securities, told Securities Daily that if policy rates are continuously lowered in the short term and LPR quotes are guided to follow suit, coupled with significant room for downward adjustments in existing home loan rates, banks will face significant downward pressure on net interest margins in the second half of the year, which is not conducive to the stability of bank operations. If deposit rates are significantly lowered to stabilize net interest margins, it may trigger a risk of large-scale migration of bank deposits to wealth management and other asset management products, which is also not conducive to the stability of bank operations.

Zhou Maohua, Macro Researcher at the Financial Markets Department of Everbright Bank, expects that as the special period at the end of the quarter approaches, with increased government bond supply, disturbances from reserve payments, tax payments, and other factors affecting short-term liquidity, the market anticipates stronger macro policies. The central bank may still introduce tools such as reserve requirement ratio cuts, in coordination with proactive fiscal policies, along with flexible open market operations, and it is expected that liquidity will continue to remain stable

US August PCE Price Index

On Friday (September 27), the US Bureau of Economic Analysis will release the August PCE Price Index.

Bank of America stated that it is expected that the US August PCE will be another "encouraging" personal consumption expenditure report. Bank of America believes that the Fed's outlook for inflation gradually easing is still on track. If the core PCE month-on-month rate rises strongly by 0.3% or higher, it may boost the US dollar. However, Bank of America also mentioned that following the Fed's indication of its increased focus on the softening US job market, next week's inflation data may take a back seat.

On Thursday (September 26), the US will release the initial jobless claims for the week ending September 21, revealing the recent status of the labor market.

Fed Officials Including Powell Speak Out

On Thursday (September 26), Federal Reserve Chairman Powell will pre-record a video for an event's opening remarks.

After the Fed's first 50 basis points rate cut in four years, Powell will speak publicly for the first time, with investors focusing on his possible stance on the rate cut path for the rest of the year.

In their speeches this Friday, Fed officials still have differing views on the extent of further rate cuts. Fed Governor Waller stated that if the job market deteriorates, they may consider another 50 basis points rate cut, while Fed Governor Bowman mentioned that considering inflation still being above the 2% target level, a 50 basis points rate cut may lead the public to think the Fed prematurely declared victory over inflation, and they are more inclined towards a 25 basis points rate cut.

Furthermore, several Fed officials will also deliver speeches:

Monday (September 23): 2024 FOMC voter and Atlanta Fed President Bostic will speak on economic outlook, 2025 FOMC voter and Chicago Fed President Guzby will participate in a fireside chat.

Tuesday (September 24): 2026 FOMC voter and Minneapolis Fed President Kashkari will deliver a speech.

Thursday (September 26): Fed Chair Powell will pre-record a video for an event's opening remarks, FOMC permanent voter and New York Fed President Williams will deliver a speech, Fed Governor Brainard will deliver a speech, US Treasury Secretary Yellen will deliver a speech.

Friday (September 27): 2026 FOMC voter and Minneapolis Fed President Kashkari will have a fireside chat with Fed Governor Brainard.

Japan's Ruling Party LDP Presidential Election Begins

On Friday (September 27), the Liberal Democratic Party of Japan will hold a presidential election, and the new president will succeed Fumio Kishida as the Prime Minister of Japan.

According to Xinhua News Agency report, on the 12th, Japan's ruling party, the Liberal Democratic Party, announced the presidential and party leader election, with a record number of 9 candidates. The Prime Minister of Japan is nominated by the party and elected by the members of both houses of the parliament, generally the leader of the party with the majority of seats in the House of RepresentativesAccording to the results of the public opinion survey, the most popular candidates for the new party leader include former Defense Minister Shigeru Ishiba, former Environment Minister Shinjiro Koizumi, current Minister of Economic Security Sanae Takaichi, and current Minister of Digital Affairs Taro Kono.

The voting is scheduled for the 27th, with the counting to take place on the same day. The media predicts that in the first round of elections, it is highly likely that no candidate will receive more than half of the votes. The outcome of the second round will depend on whether a candidate can garner more support from members of the parliament. In previous elections, there have been instances of candidates overturning the results in the second round by gaining more support from parliament members.

Other Important Data, Meetings, and Events

• Final Values of US GDP and PCE Price Index for the Second Quarter

On Thursday (September 26), the US Bureau of Economic Analysis will release the final annualized quarter-on-quarter values of GDP and the core Personal Consumption Expenditures (PCE) Price Index for the second quarter.

The previously released revised values show that the actual GDP annualized quarter-on-quarter growth rate for the second quarter in the US was 3%, an upward revision of 0.2 percentage points from the initial value of 2.8%, with a first-quarter growth rate of 1.4%. The revised annualized quarter-on-quarter GDP deflator for the second quarter in the US was 2.5%, in line with expectations and the initial value of 2.3%.

The revised annualized quarter-on-quarter core Personal Consumption Expenditures (PCE) Price Index for the second quarter in the US was 2.8%, slightly lower than the initial value of 2.9% and below the expected 2.9%, indicating that consumer spending remains resilient, reducing the likelihood of an economic "soft landing."

• Micron Technology will announce its Q4 FY2024 earnings report after the US stock market closes on September 25.

The previous quarter's financial report showed that Micron Technology's revenue for the third quarter was $6.81 billion, an 81.6% year-on-year increase from $3.75 billion in the same period last year, surpassing analysts' expectations of $6.67 billion and the previous quarter's revenue of $5.82 billion.

Micron Technology expects that the adjusted revenue range for the fourth quarter ending in August will be between $7.4 billion and $7.8 billion, with the midpoint of the range largely in line with analysts' expectations of $7.58 billion; adjusted EPS is expected to be $1.08 per share plus or minus $0.08, compared to the market expectation of $1.02; adjusted operating margin is expected to be between 33.5% and 35.5%, with the market expecting 34.5%Although the guidance for the next quarter met market expectations, Micron Technology's stock price fell more than 9% after hours due to its lackluster performance.

IPO Opportunities

During the week (September 23rd - September 27th), there was 1 new stock listed on the Beijing Stock Exchange and 1 new stock available for subscription in the A-share market.

A total of 11 new funds were issued during the week (combining A-class and C-class), including 2 bond funds, 0 hybrid funds, 0 equity funds, 3 index funds, and 0 Reits.