Today's Market Focus: The Federal Reserve Might Significantly Alter Its Economic Outlook This Month

Market Review

Focus News

China Market

1. NDRC States No Adjustment to Domestic Refined Oil Prices

The National Development and Reform Commission (NDRC) stated that since the price adjustment of domestic refined oil on August 23, 2023, international market oil prices have fluctuated. Based on the current domestic refined oil price mechanism, the average price of the first 10 working days on September 6 compared to the average price of the 10 working days prior to August 23 did not result in an adjustment amount exceeding 50 yuan per ton. According to Article 7 of the "Petroleum Price Management Measures," the prices of gasoline and diesel will not be adjusted this time, and the unadjusted amount will be carried over or offset in the next price adjustment.

2. Hong Kong May Consider Relaxing Listing Thresholds for the Stock Market

The task force for promoting liquidity in Hong Kong's stock market held its first meeting to conduct a comprehensive review of enhancing liquidity in Hong Kong's stock market. The meeting revealed that due to the current stricter profitability requirements for listing applicants compared to other global exchanges, the task force might consider recommendations to relax these thresholds. Additionally, the group will discuss issues such as market trading volume, attracting IPOs to list in Hong Kong, and reducing the stamp duty on stock transactions.

3. CNKI Fined 50 Million Yuan for Illegally Processing Personal Information

The Cyberspace Administration of China announced that, based on the conclusion of the cybersecurity review and the issues and leads found, it has initiated an investigation into CNKI (China National Knowledge Infrastructure) for suspected illegal processing of personal information. According to the cybersecurity review, CNKI was ordered to cease the illegal processing of personal information and was fined 50 million yuan.

Overseas Markets

1. Federal Reserve's Beige Book Indicates Moderate Economic Growth

The Federal Reserve's Beige Book reports that the U.S. economy experienced moderate growth from July to August. Consumer spending on tourism exceeded expectations, though consumption in other areas slowed down. Job growth was restrained across the U.S. during the survey period, with continued imbalances in the job market and a slowdown in hiring activities. Most Federal Reserve districts reported a general slowdown in the pace of price increases.

2. Federal Reserve May Significantly Alter Economic Outlook This Month

Wall Street believes that strong economic indicators, including the highest monthly increase in personal consumption expenditures in July, signal robust economic growth in the U.S. This could lead the Federal Reserve to double its economic growth forecast for this year compared to its previous projections while reducing the expected magnitude of rate cuts next year. Recently, economists at Goldman Sachs further lowered the probability of a U.S. recession from 20% to 15%. The Atlanta Federal Reserve's GDPNow model estimates that the real GDP growth rate in the U.S. for the third quarter of this year will reach 5.6%.

3. Bullard Suggests Keeping the Option of Another Rate Hike this Year

Former St. Louis Fed President and hawkish figure, Bullard, suggested that it might be wise and necessary for the Federal Reserve to continue raising rates later this month based on recent data and risk management. Meanwhile, Boston Fed President Collins mentioned that policymakers need to remain patient when planning the next steps, but further tightening of policy might still be necessary.

4. Bank of Canada Maintains Rate at 22-Year High

As anticipated by the market, the Bank of Canada kept the key interest rate at the highest level in 22 years at 5%, marking the third time the bank has held rates steady in this cycle of rate hikes. However, the Bank of Canada noted that despite evidence of diminishing excess demand in the economy, officials remain concerned about the persistent potential inflationary pressures and are prepared to further raise policy rates if necessary.

5. Japanese Yen's Sharp Decline Triggers Strong Intervention Warning from Japan

Affected by the sell-off in U.S. Treasuries, leading to a stronger dollar, the exchange rate of the yen to the dollar plummeted to 147.8, hitting a new low since November last year. Japan's Vice Minister for International Affairs at the Ministry of Finance, Makoto Kanda, stated that the significant fluctuations in the yen bring uncertainty to businesses and households, negatively impacting the economy. Japanese officials are closely monitoring market changes and are prepared to handle the situation appropriately without ruling out any options.

Today's Focus

Today, investors should pay close attention to Australia's July goods and services trade balance, Germany's July industrial output, the Eurozone's Q2 seasonally adjusted GDP, China's August foreign exchange reserves, the U.S. initial jobless claims, and EIA crude oil inventory data. Additionally, speeches by Philadelphia Fed President Harker, Chicago Fed President Charles Evans, and ECB Governing Council member Wunsch also warrant investors' attention.