Jing Shun: The stronger than expected US dollar may bring negative factors to emerging market assets.

Zhao Yaoting, global market strategist for Invesco in the Asia-Pacific region (excluding Japan), described the recent rate cut as a hawkish one. On the positive side, the rate cut by the Federal Reserve this time exceeds the easing cycle of 1995-96, during which the U.S. economy avoided recession and subsequently experienced strong growth. Ultimately, the Fed's policy will be data-driven, so the bank needs to focus on the data to understand the path of monetary policy. In addition, Invesco also needs to monitor whether the U.S. dollar will be stronger than expected, as this could particularly impact emerging market assets negatively. As expected, the Federal Open Market Committee (FOMC) cut rates by 25 basis points. Zhao Yaoting said that the market's instinctive reaction to unexpected dot plot forecasts was evident, but the bank must note that dot plots can be very inaccurate. In December 2021, the Fed's dot plot forecasted a rate hike in 2022 to be less than 100 basis points, but later the Fed's rate hike in 2022 exceeded 400 basis points. Zhao Yaoting's investment outlook remains unchanged. Invesco expects loose monetary policy to continue, but in a more gradual manner, and global economic growth will pick up speed next year. This means that the bank still expects risk assets to perform well next year. Fed Chair Powell mentioned multiple times at yesterday's meeting about closely monitoring the future development of the labor market. Although loose policies are currently being implemented orderly, the Fed seems to be very concerned about the state of the labor market. "Inflation rebound" is mentioned as an uncertain factor in Invesco's investment outlook, and this scenario seems more likely to occur. Especially if FOMC members anticipate policy impacts from the Trump administration's policies before the data reflects them, and take action preemptively to cool inflation, this needs to be watched closely.