Will the two major events in the evening affect the market? Investors should pay attention to:

1. Federal Reserve Chairman Powell will co-host the "Fed listen" round table at 22:30 Beijing time on Wednesday to discuss the state of the job market, local banking, community development challenges and other topics.

two。 The minutes of the September policy meeting will be released by the Federal Open Market Committee (FOMC) at 02:00 Beijing time on Thursday. Investors will look for clues as to whether the Fed will cut interest rates at its October meeting.

-Editor's Note

On Thursday, October 10, Beijing time, the Federal Reserve will release the minutes of its monetary policy meeting. The Fed's position in this summary is slightly different from that expected in the previous resolution, as recent US economic data have been poor, sparking concerns about US inflation and the economic outlook and raising market expectations of Fed interest rate cuts.

At the same time, as Powell says he is open to cutting interest rates and restarting QE this year, the market needs to pay attention to the Fed or provide guidance for the October decision.

The Federal Reserve reviewed its September resolution: hawks cut interest rates and are optimistic about the outlook for employment and inflation

On September 19, Beijing time, the Federal Reserve cut interest rates for the second time this year. In addition to cutting interest rates by 25 basis points as scheduled, the Fed adjusted the excess reserve ratio (IOER) from 2.10 per cent to 1.7 per cent.

However, the interest rate resolution was seen by the market as the most divisive in years, with three members of the Federal Reserve voting against the policy decision, with hawks George and Rosengren continuing to call for a 50 basis point cut in interest rates. Brad, the dove, called for an immediate 50 basis point cut, and the internal differences widened sharply, adding to the uncertainty of the last two decisions of the year.

In addition, the Fed's "dot matrix" showsOf all the voting and non-voting Fed decision-making officials, five believe that interest rates should be kept unchanged in the previous range of 2-2.25%, and five agree with the current rate cut, but believe that there is no need to cut interest rates this year. Another seven people believe that the third easing action of the year is still necessary before the end of the year. It further suggests that divisions within the Fed are becoming more and more obvious.

However, the Fed believes that the job market remains strong, the economy grows moderately, household spending is strong, but investment and exports are weak.

In terms of economic growthThe median forecast for GDP growth in 2020 is 2.0%, and it is expected to be 2.0% in June, unchanged. The median forecast for GDP growth in 2021 is 1.9%, and 1.8% in June, slightly revised up. The median forecast for GDP growth in 2022 is 1.8 per cent. Overall, the Fed sees no signs of deterioration in U. S. economic growth.

In terms of employmentThe median unemployment rate is expected to be 3.7% in 2020 and 3.7% in June, unchanged. The median unemployment rate is expected to be 3.8% in 2021 and 3.8% in June, unchanged. The median expected unemployment rate in 2022 is 3.9%. Overall, the Fed believes the U. S. job market remains strong.

In terms of inflationThe Fed puts the median PCE inflation forecast at 1.5% in 2019 and 1.5% in June, unchanged. The median inflation forecast for PCE in 2020 was 1.9%, compared with 1.9% in June, unchanged. The median PCE inflation forecast for 2021 is 2.0%, and it is expected to be 2.0% in June, unchanged. The median PCE inflation forecast for 2022 is expected to be 2.0 per cent. Overall, the Fed believes the US will gradually reach its 2 per cent inflation target without the risk of worsening inflation.

In addition, permanent open market operations or permanent repo operations are not mentioned in the Fed's interest rate resolution. So the market interprets the Fed as a hawkish rate cut in September.

Key data guidelines

• ISM manufacturing PMI falls to a 10-year low

The ISM manufacturing industry in the United States actually released 47.80,50.5,49.1 on October 1st. It recorded the lowest level since June 2009.

Among them, the US ISM manufacturing employment index actually released 46.30 in September, with a previous value of 47.4. Analysts believe that the lower performance of the employment segment may also indicate the poor performance of this week's non-farm payrolls data.

Market analysts pointed out that US construction spending barely increased in August as spending on non-residential projects fell for the second month in a row, offsetting the largest increase in private housing investment in nine months. Spending on private housing projects jumped 0.9 per cent, the biggest increase since November 2018, after rising 0.6 per cent in July.

The global trade situation remains the most important issue, and business confidence continues to decline, according to ISM, an American supply management association. The contraction in new export orders that began in July 2019 proves this. Overall, this month's popularity remains cautious about recent growth.

• There are also signs of a sharp slowdown in non-manufacturing PMI dragged down by manufacturing.

The September ISM non-manufacturing PMI of the United States actually released 52.6, with a forecast of 55.0, with a previous value of 56.4, falling to the lowest level since August 2016.

Among them, the ISM non-manufacturing employment index in the United States in September actually released 50.4, the previous value of 53.1.

Analysts point out that the service sector, which accounts for about 90% of the u.s. economy, has expanded at its lowest rate in nearly three years. Respondents to the ISM survey were mostly positive about the business environment, but still worried about tariffs and geopolitical uncertainty. Some respondents are already building up inventories because import prices are expected to rise.

The analysis points out that the decline of PMI in the manufacturing industry also has a certain impact on the service industry. The key to the recent deterioration is the further spread of the manufacturing slowdown caused by international trade to the service sector, with a glimmer of hope coming from the manufacturing sector, although factory conditions are also the toughest since 2009. Weak PMI data also had an impact on US GDP in the third quarter.

• The mixed joys and sorrows of non-farmers have partly allayed fears of recession in the United States, but wage growth is insufficient and fears of weak inflation have intensified.

The number of new non-farm payrolls in the United States in September was 136000, less than the expected 145000, but the previous value was revised to 168000 from 130000.

The average annual rate of hourly wage in the United States in September actually recorded 2.90%, a sharp decrease of 0.3 percentage points from the previous and expected values.

The unemployment rate in the United States in September hit a record low of 3.50 percent since 1969, down 0.2 percentage points from previous and expected values.

The U.S. Labor Department says an average of 157000 new non-farm payrolls have been created in the past three months. Employment in professional, business services and health care increased in September.

Adrian, chief economist of Allianz: overall, the performance of the non-farm payrolls data is not as good as expected, but it is not exaggerated. The report data are not bad enough to prove that the economy is weakening rapidly, but it also does not show that domestic industries are not affected by global pressures.

• The monthly rate of PPI in the United States fell to an eight-month low, suggesting weak or persistent inflation

Specific data show that the actual annual rate of PPI in the United States in September is 1.4, expected to be 1.8, with a previous value of 1.8, while the monthly rate of PPI in the United States in September is-0.3, expected to be 0.1, and the previous value is 0.1. Among them, the monthly rate of PPI in the United States in September recorded the biggest decline in eight months.

In addition, the core PPI (annual rate) of the United States in September actually released 2, expected 2.3, with a previous value of 2.3; the core PPI (monthly rate) of the United States in September actually announced-0.3, expected 0.2, and the previous value of 0.3.

Agency comments pointed out that the monthly rate of PPI in the United States unexpectedly fell in September, the biggest decline in eight months. Affected by the lower cost of goods and services, this could give the Fed room to cut interest rates again this month to limit the drag on economic growth caused by the trade situation and the global economic slowdown.

Fed officials made a list of positions after the September resolution

Economic data have a direct impact on the direction of Fed policy.

A week after the Fed cut interest rates for the second time this year in September, the Fed's policy tone changed. In addition to continuing the hawkish view of the Fed's decision to cut interest rates, a number of economic data performed well and supported the Fed's view of suspending a rate cut.

Specific data show that the total annualized total of new home sales after the August quarterly adjustment announced on September 25 was much better than expected, recording 71.3, better than expected 65.8 and the previous value of 63.5.

The final annualized quarterly rate of the US core PCE price index for the second quarter released on September 26th was 1.9%, better than the previous 1.7%.

The US PCE price index released on September 27th was in line with expectations, while the initial monthly rate of durable goods orders in the US in August was 0.2, better than the expected-1 per cent. In September, the final consumer confidence index of the University of Michigan was revised up to 93.2, better than the previous 92.1.

However, as manufacturing and non-manufacturing data fell sharply short of expectations, this loosened the position of some Fed officials who had thought interest rate cuts should be suspended. The following is a list of the statements and shifts of Fed officials since the September resolution.

• Powell, chairman of the Federal Reserve (changed his position after recent poor US data)

After implementing the interest rate cut this year, Powell stressed that the outlook for the US economy is sound, but weak global economic growth and the international trade situation have put pressure on the economy.

Powell said that in the face of some significant changes, we have taken this step to help the US economy maintain strong momentum and guard against ongoing risks. Powell's implication is that the rate cut is still a preventive cut and has not begun a cycle of further easing.

However, with the recent sharp deterioration in US economic data, Mr Powell said he was open to further interest rate cuts at a time when the global economy was at risk. He pointed out that the timing for the Fed to expand its balance sheet again to ensure the smooth functioning of money markets is "up to us now".

Mr Powell did not promise further interest rate cuts, but noted that recent data revisions showed that job growth in the year to March was lower than previously expected, turning a "booming" market into a market with moderate growth. Other recent economic data, including a possible contraction in manufacturing, have added to the feeling of a slowdown.

• Federal Reserve official Brad (dove)

"I think prudent risk management is to cut policy rates sharply now and then raise interest rates if the downside risks are not realized," Mr Brad said. A 50 basis point cut at this time will help promote inflation and inflation expectations to return to the target more quickly. Brad believes that the September resolution should cut interest rates by 50 basis points at once.

With the poor economic data, Brad said: "A larger-than-expected slowdown may make it more difficult for the FOMC to meet its 2 per cent inflation target, and further interest rate cuts may be needed to offset the risk." "

• Rosengren, chairman of the Boston Fed (hawkish positions have loosened after recent poor US data)

A week after the rate cut, Mr Rosengren remained hawkish, arguing that "in an economy where the labour market is already tight, additional monetary stimulus is unnecessary and has the potential to further raise the price of risky assets." and encourage households and businesses to be over-indebted. Mr Rosengren does not support a rate cut in September.

But with poor US manufacturing and non-manufacturing data, Rosengren also said he was "open" to the next interest rate decision and was watching consumer spending to see if economic growth weakened further.

On the economy, Rosengren said, "my overall view is that it will reach a potential growth level in the second half of this year." This figure is weaker than before, but in fact it is very consistent with the growth rate of 1.7%.

• Federal Reserve Vice Chairman Clarida (neutral)

"We all agree that the economy is in good shape, we all agree that the momentum is solid, but we have different views," Clarida said. The committee agreed that our common goal is to maintain the maximum level of employment and price stability. In terms of global growth, the situation is deteriorating. In terms of global trade and global investment, it has been quite weak for some time. "

• Chicago Federal Reserve Chairman Evans (changed his position after the recent poor US data)

Within a week of the rate cut, Mr Evans made a clear U-turn, saying that he expected the Fed's two interest rate cuts this year to be enough to raise inflation above its 2 per cent target, and did not think another cut was needed, as far as interest rates were concerned, we are in a better position.

But with US manufacturing and non-manufacturing data poor, Mr Evans said the Fed could cut interest rates again because of concerns about ISM data, so the move would provide more precautionary insurance for the US economy against headwinds and boost inflation.

• Kansas Federal Reserve Chairman George (partial Eagle)

George believes there is no need to ease unless the slowdown worsens.

"the slowdown in economic growth in 2019 is in line with my own expectations, that is, it will gradually slow to the trend level in the medium term, and if the data to be released show that the economy is generally weak, then adjusting policy may be appropriate for the Fed's task of maximizing sustainable employment and stabilizing prices," he said.

• Chairman of the San Francisco Federal Reserve Daley (neutral)

Daley said she supports the Federal Reserve to cut interest rates twice to deal with the disadvantages of slowing global economic growth, trade policy uncertainty and geopolitical risks, which monetary policy can and should offset.

• Dallas Fed Chairman Kaplan (Neutral)

'We need a wide range of policies, and what the global bond market tells us is that if you just rely on monetary policy, then what you can achieve will be limited, 'says Mr Kaplan. With regard to the US economy, the likelihood of a recession in the next 12 months is relatively low and will improve slightly in the next 24 months.

• Philadelphia Federal Reserve Chairman Huck (partial Eagle)

'overall, I think the economy is in very good shape, but there are obviously disadvantages, 'Mr. Huck said. In terms of interest rates, we should remain unchanged and see how these unfavorable factors can be resolved.

• Richmond Fed Chairman Barkin (neutral)

Barkin said that his attitude towards interest rates is very balanced and that there will be a lot of information to refer to before policy makers have to make decisions on interest rate policy again.

• Atlanta Federal Reserve Chairman Bostick (neutral)

Bostick believes that depending on the situation, we may need to do more.

• Minneapolis Federal Reserve Chairman Kashkari (dove)

Kashkari believes that the U. S. economic outlook is mixed and employment performance is strong, but there are some signs that U. S. companies are slowing hiring and individuals advocate deeper interest rate cuts. If you fall back into recession, it would be appropriate to adopt QE. I don't know how much more the Fed should cut interest rates. The economy faces many risks and is happy to see the Fed cut interest rates.

We also need to see if Trump will attack the Fed again.

After the Fed cut interest rates as scheduled on Sept. 19, US President Donald Trump said that the Fed and Federal Reserve Chairman Powell had failed again, had no foresight, had no foresight and were a bad communicator.

Although the Fed cut interest rates as scheduled, it fell far short of Trump's expectation of an one-off rate cut of 200 basis points, which drew criticism from Trump.

On Sept. 22, Trump said again that Federal Reserve Chairman Powell could not help and would fire him if necessary, six months later, Trump again mentioned the issue of firing Powell.

As US manufacturing PMI fell to a 10-year low on October 2nd, Mr Trump tweeted:'as I predicted, Powell and the Fed allowed the dollar to become so strong, especially relative to all other currencies. as a result, our manufacturers have been negatively affected. The interest rate of the Federal Reserve is too high. They are their own worst enemies, and they have no idea. Pathetic.

After poor PPI data on Tuesday, Trump said that US inflation is so low that the US is qualified to cut interest rates and would like to see a big cut.

Although Trump's statement about the Fed has gone unnoticed by the market, Trump is increasingly blaming the deterioration of US economic data on the Fed's monetary policy, which could increase the pressure on the Fed to cut interest rates.

Expectation of interest rate cut

Market expectations for a Fed rate cut this year are as high as 95%, and expectations for a rate cut in October have risen to 85.3%.

Expectations for an October rate cut fell below 50 per cent at one point after the second hawkish rate cut in September.

Summary

As recent data deteriorate, it is likely to reinforce the dovish message in the minutes of the evening meeting, and the market needs to focus on the Fed's outlook on inflation and the economic outlook.

At the same time, as Powell says he is open to further interest rate cuts and QE, the market needs to keep an eye on the Fed or provide guidance for October's interest rate decision.