Overseas Chinese Banking Corporation: Market expectations for the Federal Reserve to cut interest rates further this year have cooled down
Economist Jiang Jing of Oversea-Chinese Banking Corporation pointed out that the minutes of the Federal Reserve's September meeting showed a divergence among officials on interest rate cuts, leading to a cooling of market expectations for rate cuts this year. U.S. stocks rose, with the Dow and S&P hitting new highs, while the bond market saw an increase in U.S. Treasury yields. The U.S. dollar index rose but faced resistance at the 103 level, causing non-U.S. currencies to generally weaken. San Francisco Federal Reserve Bank President Daly and Dallas Federal Reserve Bank President Logan both indicated that the Fed may gradually cut interest rates
According to the latest information from the Wise Finance APP, Ginger Jiang, an economist at OCBC Bank Hong Kong, stated that more Federal Reserve officials support a more moderate pace of interest rate cuts. At the same time, the minutes of the September monetary policy meeting also showed that there is a divergence within the Federal Reserve on whether to cut interest rates by 50 basis points, further dampening market expectations for interest rate cuts later this year. Investors are focusing on the inflation data released in the United States on Thursday, with the Dow and S&P hitting new highs, marking two consecutive gains in the US stock market. In the bond market, US Treasury yields continue to rise across the board, with the 10-year yield rising to a ten-week high intraday; the bid yield for the US Treasury's $39 billion 10-year auction was 4.066%, the highest since July, and market participants continue to trade cautiously ahead of the inflation data release.
In the foreign exchange market, the US dollar index continues to rise but faces resistance at the 103 level; non-US currencies are generally weakening, with the New Zealand dollar and Japanese yen leading the decline. Dragged down by rate cuts, the New Zealand dollar plummeted 1.24% against the US dollar on Wednesday to near a two-month low.
Mary Daly, President of the Federal Reserve Bank of San Francisco, stated that if the economy develops as expected, the Federal Reserve may cut interest rates one to two more times this year; Robert Kaplan, President of the Federal Reserve Bank of Dallas, said that authorities should gradually cut interest rates amid economic uncertainty to support a slower pace of rate cuts.
The minutes of the September Federal Reserve meeting show that officials have differing views on interest rate cuts, with some officials indicating that a 25 basis point cut is in line with the path of policy normalization. However, all decision-makers agree that the downside risks to the employment outlook have increased, with the risks of achieving inflation and employment goals roughly balanced