Huatai Securities: The necessity for a Fed rate hike in October has decreased; a December rate hike is expected as the baseline scenario.

The current market pricing implies a probability of more than 50% that the Fed will hike rates in October, but Huatai Securities believes that, with the fading fiscal impulse, the growing erosion of household consumption by oil prices, and tighter financial conditions, employment and inflation data may cool somewhat over the next one to two months, reducing the need for a Fed rate hike in October. It expects another rate hike in December as the baseline scenario, while the Fed's rate path in 2027 will depend on subsequent economic data, especially whether the labor market will continue to improve, thereby driving a rebound in wage growth, as well as the trajectory of inflation.