• English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
Ukrainian President Volodymyr Zelensky lashed out at the U.S. Embassy on April 5, calling its statement "weak" and failing to blame Russia for the missile attack on the Ukrainian city of Krivyh.On April 5, OPEC+ major members reiterated that they must strictly abide by their oil production quotas after the group unexpectedly announced an accelerated pace of production increases, causing crude oil prices to plummet. According to a statement released by the group on its official website on Saturday, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) noted that some member countries had failed to fully comply with production restrictions and had not further cut production as promised to make up for excess production. These countries were told to submit compensation plans by April 15. OPEC+ shocked the oil market last week when it announced that it would accelerate production increases. Delegates privately said the move was aimed at urging member countries such as Kazakhstan and Iraq to strengthen enforcement discipline.April 5th news: So far, the strong earthquake in Myanmar has caused 3,455 deaths, 4,840 injuries and 214 missing persons.On April 5, after US President Trump announced the "reciprocal tariff" plan, Apples stock price suffered a heavy blow for two consecutive trading days, and its market value shrank significantly. According to the calculation of investment bank Morgan Stanley, the imposition of tariffs on China will increase Apples costs by about US$8.5 billion each year. Reuters quoted analysts as saying that if Apple passes all tariff costs on to consumers, the retail price of iPhone16 Pro Max in the United States will rise from the current US$1,599 to US$2,300 (about RMB 16,750). During Trumps first term, Apple began to promote the diversification of its supply chain, but the Trump administrations plan to impose high "reciprocal tariffs" on Southeast Asian countries will undoubtedly hit Apples supply chain hard.Ukrainian military: Russian troops used cluster weapons in "brutal" attack on Krivelikh.

Fed meeting minutes forward look: expected to reiterate the upcoming reduction in debt purchases

Oct 26, 2021 10:52

The Fed’s conditions for reducing the size of its debt purchases are “basically met,” and Fed Powell’s words have been echoing in the minds of traders. Perhaps the weak non-agricultural employment data may discourage the Fed from cutting its $120 billion monthly bond purchase plan. So will "almost" become "not yet"? The minutes of the Fed meeting will provide further answers.


The US economy only added 194,000 jobs in September, which is less than half of the expected 500,000 jobs. This is the second disappointing data in a row and may indicate a significant slowdown in recruitment. This may make people wonder whether it is necessary to tighten policies. One of the tasks of the Federal Reserve is to ensure full employment.

Another reason to think twice comes from the wage data in the non-agricultural employment report. As expected, the average hourly wage increased by 4.6% year-on-year. If more leisure and hospitality workers return to work, this number will be lower because their wages are relatively low. As these types of jobs increase, wage growth will be even higher.

Wage data shows that because consumers have less money in their pockets, inflation is lower. It should be noted that this estimate was completed before the September consumer price index statistics were released. However, the core CPI in August was lower than expected and fell to 4%.

A weak labor market and weak price pressures mean that the Fed needs more support. The Fed may postpone its official announcement of reducing the size of its debt purchases from November to December, resulting in more US dollars being printed—and therefore currency weakness. Is that right?

The decrease in leisure and hospitality employees returning to work is the result of the new crown pneumonia epidemic. The delta variant continues to cause havoc in the United States, causing customers to stay away from restaurants, leading to reduced recruitment. Recent coronavirus statistics show a decline in cases, which means that these jobs may be restored later.

In addition, returning to Powell's words-"almost satisfied"-means that the threshold for not reducing debt purchases is very high. In addition, the Fed has vowed to warn the market "long in advance" to prevent the "shrinking panic" of 2013. So far, the Standard & Poor's 500 Index has fallen 5% from its all-time high, which is not even the last formal correction-10%. So far, the Fed’s early warning plan is pretty good.

Therefore, the threshold for changing the Fed's thinking is high. The non-agricultural employment data is not very good, but it is enough to reduce quantitative easing - especially when the non-agricultural employment data in August has been revised upwards, which added about 131,000 jobs.

In general, the minutes of the Federal Open Market Committee (FOMC) meeting should reiterate the Fed's position that it is about to reduce the size of bond purchases.

If, as the above analysis implies, the Fed reminds the market that it is eager to reduce bond purchases, then there is still room for the U.S. dollar to rise and the stock market to fall. If the CPI data weakens, this reaction will be even more pronounced. The slowdown of money printing means that the currency is stronger, and the decrease in currency issuance means that the amount of dollars flowing into the stock market decreases.

If the minutes of the Federal Open Market Committee's meeting are not sure about reducing quantitative easing (given the noisy hawks within the Fed, this is unlikely), the dollar will fall and the stock market will benefit.