Tianfeng: Interest rate cut in December on the way?

Tianfeng released a research report stating that for future assets, US bond yields are expected to continue to decline. As the depreciation of the Japanese yen comes to an end, the US dollar may gradually shift from volatility to a downward trend. As a result, major commodity categories are expected to rise, and recently heavily fallen gold and silver are also expected to rebound. The start of the overseas interest rate reduction cycle is expected to benefit the inflow of funds into emerging markets. US September CPI inflation was lower than expected September CPI was 3.0% year-on-year, lower than the expected 3.1% and the previous value of 2.9%; CPI increased by 0.3% month-on-month, lower than the expected 0.4% and the previous value of 0.4%. Core CPI was 3.0% year-on-year, lower than the expected 3.1% and the previous value of 3.1%; core CPI increased by 0.2% month-on-month, lower than the expected 0.3% and the previous value of 0.3%. Breaking it down: 1) Food inflation cooled down, energy commodity prices rose significantly. Food increased by 0.2% month-on-month (previous value 0.5%), and 3.1% year-on-year (previous value 3.2%), both cooling down; energy commodities rose sharply by 3.8% month-on-month (previous value 1.7%), while energy services decreased to -0.7% month-on-month (previous value -0.2%); overall energy increased by 1.5% month-on-month, a significant increase of 0.8 percentage points from the previous period. 2) Core goods: Inflation slowed down due to new and used cars. Core goods increased by 0.2% month-on-month (previous value 0.3%), and remained at 1.5% year-on-year. The cooling down of core goods was due to a significant drop in inflation of used cars and automotive parts month-on-month from 0.5% to 0%, and year-on-year from 2.6% to 2.3%; information technology goods also cooled down from -0.3% to -0.8% month-on-month. Furniture, clothing, leisure goods, and healthcare goods contributed to inflation, reflecting the continued impact of tariffs on prices. 3) Core services: Inflation slowed down due to housing and transportation services. Core services increased by 0.2% month-on-month (previous value 0.3%), and 3.5% year-on-year (previous value 3.6%). The largest weight housing increased from 0.4% to 0.2% month-on-month; transportation services, which performed strongly in the summer, saw inflation cool down from 1.0% to 0.3%; medical services and leisure services showed an increase in month-on-month growth rate. The data once again dispelled concerns that tariffs would lead to "stagflation." According to USITC data, the average effective tariff rate imposed by the United States on global cars (as of July) was 19.3%, compared to 2.2% before the Trump administration. Despite the increase in tariffs, the CPI for cars cooled down, possibly indicating that the main burden of car tariffs is shared by exporters or importers. The overall lower-than-expected CPI strengthens expectations for two more interest rate cuts this year. The likelihood of a rate cut at the next week's Federal Open Market Committee meeting is almost certain, and the probability of another cut in December has risen to 96% (up from 91% a day earlier). Following the data release, US stock index futures rose, while US bond yields and the US dollar declined. After the release of this data, the White House stated that inflation data may not be released next month (due to a government shutdown). Therefore, this CPI data is crucial for the FOMC meeting on December 10th. Risk warning: US economic fundamentals may exceed expectations, Federal Reserve monetary policy may exceed expectations, and global tariff policies may exceed expectations.