According to Jinse Finance, a research report by CITIC Securities points out that the Fed's 50bp rate cut in its September 2024 meeting exceeded market expectations. The statement from the meeting differed significantly from the previous one, indicating the Fed's confidence in inflation cooling and its support for the job market. The dot plot this time shows a target rate of 4.4% for this year, lower than the 5.1% at the June 2024 meeting, while also lowering the target rate level for next year. Powell said there is no pre-set path for rate cuts and decisions are still made on a meeting-by-meeting basis, continuing to emphasize policy flexibility. He also expressed optimism about the economic situation and the job market, painting a “soft landing” picture.

We believe the Fed's 50bp rate cut this time is a preemptive rate cut aimed at maintaining current economic growth and the job market while retaining policy flexibility going forward. We expect two more 25bp rate cuts this year. After overnight trading realized the expected rate cut, the market is expected to return to a “soft landing” trade in the short term. The space for decline in US bond yields is limited, and US stocks may continue to experience high volatility. Sectors like biotechnology and real estate often perform well in a “soft landing” and rate cut trade. (Gold Ten)