October 30 Macro Themes: Interest Rate Decision Meeting + Conclusion of Sino-U.S. Summit - Macro Focus Returns to Interest Rate Trends, Government Shutdown, and AI Narrative!
Finally, an intense and eventful day this week has passed.
The early morning interest rate decision meeting announced the suspension of QT along with Powell's speech.
In the morning, the leaders of China and the U.S. held a summit, reaching a trade agreement that gradually eases the current trade friction.
The major events of this week have largely concluded, and the focus now shifts to the earnings reports of Apple, Amazon, Coin, and MSTR (MicroStrategy) released in the early hours of today.
Going forward, while the macro environment does not present significant positive catalysts, two major risks—tariffs and the interest rate decision meeting—have been mitigated compared to recent conditions.
The macro narrative will now pivot to key themes: whether there will be an interest rate cut in December, a potential U.S. government shutdown, and the sustainability of AI-related developments.
1. Powell’s remarks yesterday significantly reduced the likelihood of a rate cut in December; however, following his speech, the probability of a December rate cut rebounded from 55% to 72.6%. The money market continues to bet on a 25-basis-point rate cut in December. Additionally, the dot plot for December will be crucial.
It is important to note that there are two opportunities for rate cuts in December and January, which will become key points of speculation. If, as Powell suggested, the December rate cut is postponed due to various factors, then January of next year will emerge as the focal point for rate cut expectations.
After completing the summit between the Chinese and U.S. leaders, Trump quickly returned home by plane. The external performance is over, and now he will go back to handle domestic affairs, namely political...