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Good news is here again —

I am optimistic about September because the Federal Reserve has been clearly signaling a "gradual easing" in its branding.

Currently, a slight interest rate cut in September seems to be a foregone conclusion, but what will truly determine the pace and magnitude of the rate cuts will be the employment data and inflation trends in the coming months.

The current stance of the Federal Reserve:

1️⃣Federal Reserve Governor Christopher Waller made it clear that there is a high probability of a 25 basis point rate cut in September.
2️⃣However, he also emphasized that if future economic data continues to weaken (especially if the labor market deteriorates and inflationary pressures decrease), there is a possibility of further rate cuts in the next three to six months.
3️⃣He does not currently support a one-time large rate cut (such as 50 basis points), but prefers a gradual approach.
4️⃣Key Variables: Employment Market. If non-farm data continues to be weak, the Federal Reserve may increase the intensity of interest rate cuts, and the market's risk appetite will also be further ignited.

This means that the Federal Reserve is now adopting a "defensive easing" approach: on one hand, there are concerns about economic weakness, and on the other hand, there is fear that excessive stimulus could lead to a rebound in inflation. A rate cut in September is basically a done deal, and there may be 1-2 more in the future.

Data from Jin10 Data