Weekly Hot List Highlights: Powell equivalent to cutting interest rates in advance? Non-farm revision provokes anger!

Market Review

The US dollar index showed a weak overall trend this week. As of Wednesday, the US dollar fell for four consecutive trading days, breaking below the 101 level at one point, hitting a new low for the year. On Thursday, the US dollar rebounded from its yearly low after the release of US PMI and existing home sales data. On Friday, the market interpreted Powell's remarks as the "strongest rate cut signal to date," causing the US dollar to fall below 101 again.

Spot gold prices remained relatively stable this week. On Tuesday, spot gold continued its record-breaking rally, reaching a historical high of $2531.6 per ounce in the US session; on Thursday, a rebound in the US dollar and US bond yields put pressure on spot gold, causing it to retreat to near the 2470 level at one point, but later rising to hover around $2500 per ounce. After Powell's speech on Friday, spot gold rose by $20 in a 15-minute short-term rally.

In terms of non-US currencies, with the decline of the US dollar, the US dollar against the Japanese yen recorded a decline this week, falling below 145 at one point on Wednesday, hitting a new low since August 7; the British pound, Australian dollar, Euro, and Canadian dollar all rose under the influence of a weaker US dollar.

International oil prices fell this week but rebounded slightly later. At the beginning of the week, concerns about weak demand from major oil-importing countries and hopes for a ceasefire in Gaza led to international oil prices falling to a six-month low, despite a larger-than-expected decrease in US EIA crude oil inventories, CTA intensified selling. On Thursday and Friday, due to optimistic sentiment towards a Fed rate cut and dim hopes for a Gaza ceasefire agreement, international oil prices rebounded.

The S&P 500 and Nasdaq ended the week with eight consecutive gains, while the Dow ended with five consecutive gains. During the eight-day winning streak, the S&P rose nearly 8%, marking its best performance since March 2003.

Weekly Highlights

1. Jackson Hole Sends Strongest Rate Cut Signal!

The minutes of the Fed's meeting released this week showed that Fed officials strongly leaned towards cutting rates at the September policy meeting last month, with several officials even willing to cut rates immediately. Although the Fed ultimately decided unanimously to keep rates unchanged, it opened the door to a rate cut at the September meeting.

The minutes indicated that at the July meeting, "the vast majority" of policymakers "thought that if the data continued to be in line with expectations, then easing policy at the next meeting would be appropriate." They also pointed out that "many" Fed officials believed the current stance of rates was restrictive, and "some participants" believed that keeping rates unchanged would mean that monetary policy would further drag on economic activity The meeting minutes also show that while all Federal Reserve officials agreed to keep rates steady in July, "several" policymakers indicated that progress in reducing inflation in the face of rising unemployment provided a reasonable rationale for lowering the target range by 25 basis points at this meeting, or they could have supported such a decision.

On Friday, Federal Reserve Chairman Powell delivered a speech at the highly anticipated Jackson Hole Symposium, living up to expectations by sounding the "strongest note" for rate cuts. He stated that the timing of policy adjustments has arrived, the direction of policy is clear, but the timing and pace of rate cuts will depend on data, outlook, and the balance of risks. Regarding the inflation outlook, Powell expressed increased confidence in inflation returning to 2%. As for the labor market and risks, he pointed out that the labor market does not appear likely to be a source of upward pressure on inflation in the short term; not seeking or welcoming further cooling of the labor market, upward risks to inflation have diminished, and downward risks to employment have increased.

After Powell's speech, the probability of a 50 basis point rate cut in September by the Federal Reserve increased. Institutional analysis suggests that Powell's statement is equivalent to a rate cut one month in advance.

In addition, other officials this week have been gradually signaling a rate cut in September. Minneapolis Fed President Kashkari expressed an open attitude towards a rate cut in September, but there is no reason for the magnitude to exceed 25 basis points. Fed Governor Bowman stated that there are upward risks to inflation, but if price increases continue to slow, she would support a rate cut. Boston and Philadelphia Fed Presidents also agreed to cut rates shortly, but in a gradual and orderly manner.

Federal Reserve FOMC voting member Daly stated that recent economic data has made her "more confident" that inflation is under control, and now is the time to consider adjusting the current 5.25%-5.50% rate range. She also mentioned that although the labor market is slowing down, it is "not weak."

Regarding the endpoint of rate hikes, Philadelphia Fed President Harker believes that after the end of the easing cycle, the federal funds rate may be maintained at around 3%. Boston Fed President Rosengren also expects the long-term federal funds rate to be 3%.

However, Kansas City Fed President Schmieding stated that he hopes to see more economic data before supporting a rate cut.

The market still expects a 50 basis point rate cut in September. However, the latest batch of U.S. data has not firmly supported this idea, and most FOMC members in recent public speeches seem to be subtly dampening this market expectation.

This week, the U.S. services PMI exceeded expectations, offsetting the renewed decline in manufacturing, while initial jobless claims rose slightly to 232,000 people, continuing jobless claims were lower than expected, and last week's data was revised downwards. The earlier released non-farm payroll revision showed that the U.S. job market is softer than previous data, but other economic activity and employment indicators have not shown warning signals

2. Non-farm data significantly revised, delayed release triggers Wall Street anger!

According to government data released on Wednesday, the U.S. labor market began to slow down much earlier than originally expected.

According to preliminary benchmark revision data from the Bureau of Labor Statistics, in the 12 months ending in March, non-farm employment may decrease by 818,000, the largest downward revision since 2009, averaging a decrease of about 68,000 per month, with some institutions previously predicting a maximum decrease of 1 million. The final revised data will be released early next year.

Economists say that the initial employment data may have been exaggerated for various reasons, including adjustments for business creation and closure, as well as how unauthorized immigrant workers are calculated. It is worth noting that the data was originally scheduled to be released at 10 p.m. Beijing time, but was delayed for more than 30 minutes.

Interestingly, Mizuho Financial Group and BNP Paribas called the department and directly obtained the data. According to insiders, Nomura Holdings' economic research team also successfully obtained the data through this method.

As the news spread across Wall Street, anger quickly escalated after the Bureau of Labor Statistics began releasing these data by phone. Subsequently, other companies and media, including Bloomberg News, scrambled to get hold of this data, leading to chaos.

In addition, a survey by the New York Fed in July on labor market expectations showed that the proportion of respondents who believe they may become unemployed in the next four months has risen to 4.4%, higher than the 3.9% in the same period last year, the highest since 2014.

3. U.S. Election: Harris Officially Nominated

The U.S. Democratic Party held its national convention this week, and current Vice President Kamala Harris accepted the presidential nomination. Delegates are hopeful that with Harris's support, they can win key seats in New York and California and regain the majority in the House of Representatives.

Harris's election fundraising campaign raised about $500 million in a month. Preliminary signs indicate that she is able to inspire more women to donate, and more importantly, is expected to drive this proportion higher than in any previous U.S. election.

Reportedly, Harris has called for raising the corporate tax rate to 28%, which is her first major proposal as a presidential candidate, aimed at increasing government revenue to fund the expensive plans she wants to implement.

4. Bank of Japan Still Has Reason to Raise Interest Rates Again

The Bank of Japan released two research papers on Tuesday, emphasizing the persistent inflationary pressures in the economy, indicating that there is still reason to raise interest rates again.

The reports highlight the potential impact of Japan's long-term labor shortage on wages and changes in corporate pricing behavior in the service sector. A paper on service prices states: "With increasing wage pressure, changes are occurring in corporate pricing behavior," and it is important to investigate through comprehensive analysis whether this phenomenon will further spread.

Another paper on the impact of labor shortages emphasizes that structural changes in Japan's labor market may give workers more leverage to demand higher wages. As labor market liquidity improves and the link between formal and part-time worker wages becomes apparent, corporate wage-setting behavior may become more proactive

5. Historical First! Gold Bar Price Reaches $1 Million

With the spot gold price rising to $2,500 per ounce, hitting a new historical high, the price of each gold bar has surpassed the milestone of $1 million. According to the London Bullion Market Association, in the global precious metals trading center London, gold bars usually weigh around 400 troy ounces, but the pure gold content can also range from 350 to 430 ounces. In addition, there are smaller gold bars available for individual purchase with lower total prices, such as those sold by Kai Shi.

6. Walmart Plans to Sell $3.74 Billion Worth of JD.com Shares

It is reported that Walmart is planning to seek buyers for 144.5 million shares of JD.com at a price range of $24.85 to $25.85 per share, potentially raising $3.74 billion at the highest offering price. Data shows that Walmart is the largest shareholder of JD.com. JD.com's stock price fell by approximately 10% in after-hours trading on the same day. Both companies have not commented on this matter. Sources say that Morgan Stanley is the broker dealer for this offering.

7. "Black Myth: Wukong" Breaks Even on First Day of Sales

China's first truly AAA domestic game "Black Myth: Wukong" landed on PlayStation 5 and Windows platforms this week with over 2.4 million concurrent players, ranking second in peak concurrent players among all games on Steam. According to estimated data from the foreign market research company vginsights, since its release, "Black Myth: Wukong" has sold over 8.4 million copies on the Steam platform within three days, with a positive rating of over 97%, an average playtime of 9.7 hours, and total revenue exceeding $400 million.

Multiple industry insiders predict that the total platform sales of "Black Myth: Wukong" are expected to reach 5 to 7 million copies, resulting in revenue from direct sales ranging from $1.34 billion to $1.876 billion based on the minimum selling price of 268 yuan.

8. Nearly 1.4 Trillion Yuan Financing Approved for Precise Support of Real Estate "White List" Projects

The latest statistics released by the China Banking and Insurance Regulatory Commission show that currently, commercial banks have approved 5,392 real estate "white list" projects, with approved financing amounting to nearly 1.4 trillion yuan. Liao Yuanyuan, Director of the Statistics and Risk Monitoring Department of the Financial Supervision and Administration Bureau, introduced that the urban real estate financing coordination mechanism focuses on cities as the main body and projects as the center. Projects on the designated "white list" that meet the requirements receive timely financial support, which has played a positive role in promoting project completion and delivery, safeguarding the legitimate rights of homebuyers, and stabilizing the real estate market, achieving significant results in supporting real estate project financing