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On January 2nd, BOC International released a research report stating that the State Council, in conjunction with several ministries, previously issued the "Notice on Subsidies for Large-Scale Equipment Replacement and Trade-in of Consumer Goods in 2026," continuing incentive measures for automobiles, home appliances, and digital products, and improving policy effectiveness through targeted optimization. The report believes that although the scale of the subsidy budget decreased as expected, the new policy clearly leans towards the mid-to-high-end market, with the reduction in subsidies for corresponding models far less than market concerns. Subsidies for digital products remain at 15% of the selling price, with a cap of 500 yuan, better than market expectations; subsidies for home appliances have been tightened, narrowing the target audience to six core categories, and only subsidizing those meeting the first-level energy efficiency standard, with the subsidy ratio decreasing from 20% to 15% of the selling price. The report indicates that with the early implementation of subsidy details and timely disbursement of subsidy funds, the automotive industry is expected to achieve a strong start in 2026. However, given the wait-and-see attitude of consumers in the fourth quarter leading to high channel inventory at the end of the year, the first quarter of 2026 may enter a destocking phase. At the individual stock level, the bank believes that Li Auto, Xiaomi, NIO, Wenjie, and Jike brands will be minimally affected by the adjustment of trade-in subsidies.The UK Nationwide house price index fell 0.4% month-on-month in December, the largest drop since June 2025.The UK Nationwide House Price Index fell 0.4% month-on-month in December, compared to a forecast of 0.10% and a previous reading of 0.30%.The UK Nationwide House Price Index rose 0.6% year-on-year in December, below the expected 1.20% and the previous reading of 1.80%.On January 2nd, Jens Naervig Pedersen, a foreign exchange and interest rate strategist at Danske Bank, stated in a report that global market liquidity is expected to remain thin this week but may improve next week. The strategist noted, "Looking ahead, market liquidity should improve next week as more economic data is released." Key data next week includes important US labor market data, such as the December non-farm payroll report and the ISM survey, to be released on January 9th. Market liquidity is typically low during the year-end period as many market participants take holidays or close positions.

The Devil Is In The Details: Gold Analysis - Federal Reserve Minutes

Larissa Barlow

Apr 07, 2022 10:33

Analyses of Federal Reserve Minutes 

While both the FOMC statement and Chairman Powell's press conference provide market participants with information about the FOMC's updated and revised monetary policy, it is the release of the minutes that provides investors with significantly greater clarity and understanding. The devil, as they say, is in the details.

 

The Federal Reserve issued the official minutes from its March FOMC meeting today, providing insight into the central bank's current plans to begin unwinding its balance sheet assets. Beginning in March 2020, the Federal Reserve will add around $4.6 trillion to its balance sheet by purchasing $120 billion monthly in mortgage-backed securities ($40 billion) and US Treasury securities ($80 billion), bringing their total to just over $9 trillion.

 

According to Federal Reserve Governor Lael Brainard, the Fed intends to employ a mix of interest rate rises and a quick run-off of the balance sheet to bring US monetary policy closer to neutral later this year.

 

However, the minutes released today imply that the Federal Reserve will unwind around $3 trillion over the next three years, reducing its $9 trillion balance sheet to $6 trillion. While the Fed appears to be indicating a quick runoff of its balance sheet, the reality is that the Federal Reserve's balance sheet will be nearly $2 trillion larger than it was prior to the epidemic.

 

"Participants continued their discussion on plans to reduce the size of the Federal Reserve's balance sheet in a manner consistent with the methodology outlined in the Committee's Principles for Reducing the Size of the Federal Reserve's Balance Sheet, announced following its January meeting."

 

Additionally, the minutes stated, "While no decision was made regarding the Committee's plan to reduce the Federal Reserve's balance sheet at this meeting, participants agreed that significant progress had been made on the plan and that the Committee was well positioned to begin the process of reducing the balance sheet's size as soon as after the conclusion of its upcoming May meeting."


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