Shang Bo Investment: It is recommended that investors pay close attention to the future interest rate cut path of the Federal Reserve, and there may be a pullback in US stocks.

After the Fed meeting, interest rates were cut by 0.5% and the rate cut cycle was initiated. Christian Hoffmann, the fixed income manager at Shangbo Investment Management, said that the Fed has been clear and transparent in conveying its action intentions through public speeches and appearances over the years. However, the decision to cut rates by 50 basis points today is full of uncertainty. Dissenting votes indicate that the discussion at this meeting was quite heated. Christian Hoffmann said that when the meeting minutes are released in a few weeks, it will be a document worth careful reading. Considering that this is the first time since 2005 that a board member has cast a dissenting vote, the Fed is clearly struggling not only between doing too much and doing too little, but also discussing market signals, subtle political images, and historical legacy issues. Powell was very dovish at the Jackson Hole Global Central Bank Annual Meeting, focusing on the labor market. Economic data since that meeting has hardly changed this situation, and Christian Hoffmann believes that a 50 basis point rate cut is in line with his tone. However, Christian Hoffmann believes that the preparation for this meeting was not ideal. The market's expectations for rate cuts of 25 basis points and 50 basis points were almost equal, a situation that is bound to disappoint some people. In addition, the US stock index has been rising nearly every day last week, approaching historical highs with high valuations, while benchmark bond yields have reached lows for the year. The bond market reacted differently, while the stock market rose cheerfully, but Christian Hoffmann is concerned that there may be a pullback in the future. Christian Hoffmann pointed out that the debate between 25 basis points and 50 basis points is not the key issue. Although the true neutral interest rate is uncertain and unknown, the Fed's rate is clearly above this level, in a tightening range, and gradually approaching neutrality. The Bank advises investors to carefully monitor the future rate-cutting path. Market rate cut expectations far exceed the message conveyed by the Fed. The Fed appears to have succumbed to market pressure. In the 7 weeks until the next Fed meeting, there will be a fierce political election and several important economic data releases, which will be the focus, especially in a rapidly changing economic environment. The Fed and the market are more in agreement that the rate cut over the next two years will be approximately 100 basis points.