Source: Wind

On Wednesday, November 27th, Peking time, the Federal Reserve will release the minutes of the November mmf policy meeting, with market attention focused on inflation data, policy stance, economic outlook, and other contents in the minutes.

In addition, the inflation indicator most closely watched by the Federal Reserve—the October Personal Consumption Expenditure (PCE) Price Index—will also be revealed on the same day.

According to the cme FedWatch tool, the market currently expects a 47.3% chance of pausing interest rate cuts in December, compared to 38.1% last week.

Highlight 1: To cut or not to cut.

In the November Federal Reserve meeting, the Fed implemented its second interest rate cut of the year, lowering the benchmark rate by 25 basis points to 4.5%-4.75%. In terms of inflation and employment statements, the rate announcement removed the wording "greater confidence that inflation is moving sustainably toward 2%" and changed September's "employment growth has softened" to "labor market conditions have generally eased," indicating a decrease in the Fed's confidence in inflation and a reduction in concerns over employment cooling.

HSBC economists stated in a report that due to political factors such as the USA elections, the future policy uncertainty of the Federal Reserve is increasing. The minutes of the November Federal Reserve meeting may express discussions within the Fed regarding the potential economic impact of the USA election results.

Analysts generally believe that the upward risks to interest rates are greater than the downward risks. Within Trump's policy framework, whether it is the incremental stimulus of tax cuts and increased investment, or the supply disturbances of tariffs and immigration, both will create upward pressure on interest rates.

Currently, market expectations for the Federal Reserve not to lower interest rates in December continue to rise. According to the cme FedWatch tool, the market currently anticipates a 47.3% probability of pausing interest rate cuts in December, up from 38.1% last week.

Focus point two: Economic data

In terms of data, the Personal Consumption Expenditures Price Index (PCE) for October in the usa, as the preferred inflation metric by the Federal Reserve, is garnering more attention. From last month's disclosed data, the annualized preliminary value of the usa's third quarter core PCE price index rose by 2.2% month-on-month, slightly exceeding market expectations.

Currently, analysts generally expect that based on the usa's October CPI and PPI data, the month-on-month growth rate of the core PCE price index for October in the usa will remain at 0.2%, with the year-on-year growth rate slightly rebounding from 2.7% last month to 2.8%.

At the same time, the market expects that the month-on-month growth rate of personal consumption expenditures for October may slow down from 0.5% last month to 0.4%.

Federal Reserve Chairman Powell recently stated that he expects the core PCE for October to slightly rise from 2.7% to 2.8%. If the upcoming data significantly impacts the disinflationary trend more than expected, it could further dampen the prospects for continuous interest rate cuts.

Additionally, October's durable goods orders, new home sales, the second reading of third quarter Gross Domestic Product (GDP) data, and the Conference Board Consumer Confidence Index may also attract some attention.

Analysts generally believe that current inflation risks in the usa exhibit asymmetry, with upward risks greater than downward risks. Structurally, the rebound in housing inflation and the relative stability of other core services indicate that the endogenous momentum of inflation is still ongoing.

Highlight three: Global economic impact.

The Federal Reserve's decisions not only affect the USA economy but also have significant implications for the global economy. In particular, the monetary policies of the European Central Bank and major central banks in Asia are also influenced by the Federal Reserve's policies.

On November 29 (Friday), the Eurozone will announce the preliminary CPI for November. The market is closely monitoring this report, as more and more people expect that the European Central Bank may have to accelerate its rate cuts, cutting rates by 50 basis points in December to rescue the struggling economy.

The Reserve Bank of New Zealand and the Bank of Korea will announce their latest interest rate decisions next week.

The market expects the Reserve Bank of New Zealand to cut interest rates by 50 basis points, with some speculating the cut could be as much as 75 basis points. Economists expect the Bank of Korea to keep interest rates unchanged next week but hint at possible future rate cuts.

Highlight four: Market reactions of various asset classes.

After a significant pullback earlier, last week both international gold futures and spot prices "recovered lost ground."

Data shows that last week, both COMEX gold futures prices and London spot gold prices experienced five consecutive increases, closing again above the $2700 per ounce mark last Friday, reported at $2718.20 per ounce and $2715.805 per ounce respectively, with weekly increases of over 5%.

Meanwhile, bitcoin has continued its strong momentum since Trump's victory, rising above 0.099 million dollars last week and approaching the 0.1 million dollar mark.

According to institutions in the industry, the previous fluctuations and weakening of gold may have primarily stemmed from the pressure of a strong dollar and concerns about potential fiscal contraction. However, the deficit expansion and debt accumulation in the context of 'loose fiscal policy + re-inflation' in the usa represent a more certain trading clue, so the current phase of pullback has brought about good allocation opportunities.

Editor / jayden