Overnight, US stocks opened high and fell, with the S&P 500 falling the most by 1%, the Nasdaq falling the most by 1.8%, and the Dow Jones Industrial Average eventually closing down 0.43%. The S&P 500 index fell 0.89% and the Nasdaq fell 1.67%.

The recent rise in US Treasuries has come to a sudden halt, with the yields on 2-year and 10-year US Treasuries jumping by 10 basis points at one point. The yield on the 10-year US benchmark bond rose by 5.87 basis points to 3.8597%. The yield on the 2-year US Treasury rose by 7.51 basis points to 4.0056%.

The US dollar index, which has been falling in recent days, rebounded and reached a high of 0.6%, surpassing the low of December last year.

As for ETFs, Nasdaq ETFs E Fund, GF Fund Nasdaq ETF, and CMB Fund Nasdaq 100 ETF all fell by 1%.

On the news front, Fed Chairman Powell will give a keynote speech at 10 a.m. Eastern Time on August 23rd (10 p.m. Beijing Time on Friday).

Fed officials began to hint at Jackson Hole: it is appropriate to start cutting interest rates quickly, take orderly action, and the magnitude of the rate cut will be determined by the data.

Boston Fed President Collins said that no significant economic danger signals have been found, and the labor market remains healthy overall, advocating for a gradual rate cut. Philadelphia Fed President Hark also proposed a systematic rate cut. Kansas City Fed President Schmiede said that more data is needed to support a rate cut.

In terms of economic data, the contraction rate of the U.S. August Markit manufacturing PMI was the fastest this year, while the service sector was better than expected, and the service providers' price index fell to the lowest level since the beginning of the year. The number of initial jobless claims in the U.S. last week met expectations, while the number of continued jobless claims remained at the highest level since November 2021.

In this regard, the significant volatility in the U.S. stock market last night is likely a result of taking a wait-and-see approach to today's global central bank annual meeting, after all, the S&P 500 fell 3% in a single day during the 2022 summit.

Moreover, the U.S. stock market has already priced in some rate cut expectations to some extent since July. After the significant cooling of inflation data in June, there was a shift to rate cut trades, followed by weakness in manufacturing PMI and non-farm payrolls in July, which led to concerns of a recession. The market even priced in an aggressive 50 basis points rate cut by the Fed in September, and U.S. Treasury bonds and the dollar quickly fell to 3.7% and 102, respectively, resulting in a sharp correction in the U.S. stock market. Recently, the strong performance of service sector PMI and retail sales data has brought back expectations of a "soft landing" and a slight rate cut by the Fed.

The current pricing order of various types of assets for rate cut expectations is: interest rate futures > gold > copper > U.S. Treasury bonds > U.S. stocks.

Interest rate futures imply the most rate cuts in the future year (7 times), followed by gold (2.6 times), copper (2.4 times) and short-term bonds (2.3 times), and US stocks have the least expectation of rate cuts (0.8 times). In other words, if the rate cut path is lower than expected, US stocks will not be under significant pressure, and the prospects for profits are more important.

Currently, there are multiple A-share ETF products related to the NASDAQ, tracking indexes such as the NASDAQ Technology Market Cap Weighted, NASDAQ 100, and NASDAQ Biotechnology. Among them, the four most favored NASDAQ-themed ETFs by funds this year are the Invesco Great Wall NASDAQ Technology ETF, ChinaAMC NASDAQ-100 Index ETF, China Merchants Fund NASDAQ 100 ETF, and Da Cheng Fund NASDAQ 100 Index ETF, with net inflows of 49.48 billion yuan, 38.14 billion yuan, 25.87 billion yuan, and 2.246 billion yuan, respectively.

Based on the latest scale, the four largest NASDAQ-themed ETFs on the market are CICC NASDAQ 100 ETF, Guotai NASDAQ 100 ETF, Invesco Great Wall NASDAQ 100 Technology ETF, and Huaan NASDAQ 100 ETF, with the latest scale being 21.999 billion yuan, 13.65 billion yuan, 9.68 billion yuan, and 8.19 billion yuan respectively.

The CICC Securities team believes that before the interest rate cut, assets such as US treasuries and gold can continue to be held, but because of the limited space for expected returns and interest rate cuts, it is more of a "short-term trading". After the interest rate cut, as the fundamentals gradually stabilize and recover, it is possible to switch to cyclical assets and sectors.