Key Events This Week
Fed Rate Decision
On September 18, the Fed's rate decision will be a major event, with a rate cut or even an aggressive 50 basis-point cut almost certain. The US recently released its August CPI report, showing that inflation has remained generally moderate. Although the annual CPI rose slightly to 2.9% in August, both the core CPI year-on-year and month-on-month figures were in line with expectations, without showing the runaway inflation previously feared due to tariff measures.
Meanwhile, preliminary benchmark revisions to nonfarm payroll data published recently showed that nonfarm employment figures for the year ending in March were revised down by 911,000, far exceeding market expectations of 682,000, marking the largest downward revision since 2000. This data not only heightened concerns about the health of the US economy but also cast doubt on the credibility of labor statistics. The weak signs in nonfarm payrolls undoubtedly provided new justification for the Fed to cut interest rates.
Citi analysts believe that the details of this inflation report are "encouraging" for Fed officials preparing to implement a series of rate cuts. The bank expects that this mild inflation report, combined with weak signals from the labor market, clears the way for the Fed to initiate a rate-cutting cycle.
The bank predicts that the Fed will cumulatively cut rates by 125 basis points over the next five FOMC meetings, with the policy rate potentially falling below 3%. As a result, traders have significantly increased their bets on a Fed rate cut at the September 17 meeting.
China’s August Economic Data: Retail Sales, Industrial Production, Housing Prices in 70 Cities, National Real Estate Development Investment, etc.
Key economic data for China, including national real estate development investment, retail sales, industrial production, and housing prices in 70 cities for January-August, will be released in quick succession, with institutions divided on the outlook for these figures.
CICC forecasts that most data growth will slow in August: retail sales will be dragged down by weakened support from trade-in programs, fixed asset investment and its three main components will decline, the real estate market remains weak (with sales area declines narrowing or turning positive but home prices still falling month-on-month), and only industrial production may rise to 6.0%.
Huachuang Securities, however, believes that economic momentum in August was better than in July: retail sales may rise to 4.1% (driven by government subsidies boosting retail goods), while auto consumption remains low; industrial production may increase to 6.1% (due to a rebound in the PMI production component and reduced disruptions from extreme weather); cumulative fixed asset investment growth for January-August is expected to be 1.5%, with infrastructure excluding power, real estate, and manufacturing investments growing by 2.7%, -12.5%, and 5.6%, respectively.
China and the US to hold talks in Spain
The Chinese Ministry of Commerce announced that, following consultations between the two parties, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will lead a delegation to Spain from September 14 to 17 to hold talks with the US. Both sides will discuss trade and economic issues including unilateral tariff measures imposed by the US, abuse of export controls, and TikTok.
Other central banks: The outcome of the Bank of England’s voting may dominate sterling movements, while political uncertainty raises questions over whether the Bank of Japan will signal tightening?
Next Wednesday, the Bank of Canada is expected to cut interest rates by 25 basis points to 2.5%, due to weak employment, concerns over the impact of US tariffs, and manageable inflation. If the rate cut occurs and the accompanying statement leans dovish, the Canadian dollar may fall, and the US dollar against the Canadian dollar could continue to strengthen.
The Bank of England is expected to maintain its interest rate at 4.0%, with attention focused on signals for potential rate cuts. It may also advance quantitative tightening and slow down sovereign bond issuance. Currently, the market estimates a 36% probability of a rate cut by 2025; however, some analysts believe that economic weakness could prompt a rate cut in the coming months.
The Bank of Japan is expected to maintain its 0.5% interest rate on Friday due to domestic political uncertainty. Although the prime minister’s resignation has sparked speculation about monetary easing, the Bank of Japan still considers a rate hike possible this year, with the probability of a year-end hike rising to 60%. A 25-basis-point increase is anticipated before March next year. The focus of the meeting will be on forward guidance and the press conference. If a commitment to raise rates is made, the yen may appreciate, and the election of a new prime minister could influence subsequent policies.
Meta releases its first consumer-grade smart glasses
On September 18, Meta will hold the Connect conference, where the market expects Meta's first consumer-grade smart glasses to be unveiled. Meanwhile, CEO Mark Zuckerberg will deliver a keynote speech on 'AI-powered smart glasses.'
Haitong Securities predicts that the glasses will be priced starting at $800. The design of the front frame closely resembles the Ray-Ban Meta, with the core display functionality being a monocular heads-up display focused on presenting 'glanceable' information such as time, weather, notifications, photo previews, and translations. Meta will also showcase a combination of electromyography wristbands and AR glasses to address gaps in voice interaction scenarios.
Analysts point out that equally important as the product itself, Meta is expected to simultaneously release a new software development kit (SDK), a key step in building its wearable device ecosystem. By attracting developers to create applications, Meta aims to pave the way for truly advanced AR glasses in the future. CITIC Securities believes that although the monetization and user accumulation of AR glasses will still require a long process, with current investment opportunities mainly theme-driven, Meta’s release will significantly boost market attention. Investors will focus on the catalytic effect of the event on the entire AR industry and its impact on promoting core upstream supply chain technologies such as optical waveguides and MicroLED.
Trump to Pay State Visit to the UK, Accompanied by NVIDIA's Jensen Huang and Others
According to reports from China Central Television (CCTV), U.S. President Donald Trump will make a state visit to the United Kingdom from September 17th to 19th. This marks Trump’s second state visit to the UK as U.S. President. He previously visited in 2019, where he was received by Queen Elizabeth II.
The media views this visit as part of the Starmer government’s efforts to maintain communication with the Trump administration and mitigate some adverse impacts of Trump’s policies on the UK. According to media reports citing insider sources, executives from OpenAI and NVIDIA will accompany Trump during his visit to the UK.
During Trump's visit, American companies across various industries are expected to announce investments totaling tens of billions of dollars in the UK. Jensen Huang is among several American business leaders expected to join the delegation, including OpenAI CEO Sam Altman, Blackstone CEO Steven Schwartzman, and BlackRock CEO Larry Fink. Reports also indicate that Apple CEO Tim Cook has been invited.
Monday, September 15
Keywords: China's retail sales data; Hesai announces lottery results;
Tuesday, September 16
Keywords: US monthly retail sales rate; Health 160 announces lottery results;
Wednesday, September 17
Keywords: US API crude oil inventory; US annualized housing starts; Trump's state visit to the UK;
Thursday, September 18
Keywords: Federal Reserve interest rate decision; Initial jobless claims;
Friday, September 19
Keywords: Bank of Japan target interest rate; GenFleet Medicine’s Hong Kong stock listing;
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In the new week, I wish fellow investors successful investments!
Editor/lee
