Tianfeng: The Fed's interest rate cut may lead to potential secondary inflation.

Tianfeng issued a research report stating that, compared to the previous two rounds of soft landing cycles, the U.S. economy will enter this round of interest rate cuts with the highest level of momentum before the rate cuts. Looking at it from a broader perspective, there is no "trigger condition" of a significant economic slowdown, so concerns about a recession based on a rise in unemployment lack support. This also demonstrates that Fed rate cuts may lead to re-inflation, which may not be so far off. Tianfeng's main points are as follows: Facing the unexpectedly high U.S. core CPI in August, market volatility was much lower compared to earlier in the year, and expectations for the extent of interest rate cuts for the year remained at the 100bp level after the data was released. After Powell's dovish turn in August, the market is not concerned about the reasons and results of rate cuts, only speculating on the extent of the cuts. Therefore, the market's reaction to economic data is asymmetric: there is a stronger reaction to data indicating a "hard landing," while it is difficult to adjust interest rate cut expectations for data indicating no "landing." This may be because interest rate cut expectations do not come entirely from the economic logic of the data itself. The August U.S. CPI may not change the decision for the Fed to start the interest rate cut cycle in September, as the logic behind the Fed's actions is more likely political than economic. More importantly, it signals that the U.S. still has the basis for re-inflation. If interest rates continue to fall, the U.S. economy will experience re-inflation. The U.S. economy is stronger than in previous soft landing cycles and even stronger than in previous hard landing cycles. This means that, compared to the previous two rounds of soft landing cycles, the U.S. economy will enter this round of interest rate cuts with the highest level of momentum before the cuts. Looking at it from a broader perspective, there is no "trigger condition" of a significant economic slowdown, so concerns about a recession based on a rise in unemployment lack support. This also demonstrates that Fed rate cuts may lead to re-inflation, which may not be so far off. Risk warnings: U.S. unemployment rate data may deviate significantly, U.S. corporate profits may slow down more than expected, unexpected events may occur in the U.S. elections, and uncertainty may increase in U.S. wage growth.