China Merchants Securities comments on Powell's speech: There is little doubt that the Federal Reserve will cut interest rates in September

China Merchants Securities commented on Jackson Hole Powell’s speech at the global central bank meeting. Powell’s speech contained a signal that “the economy has normalized” and that monetary policy needs to be “normalized”. 1. Supply constraints have been normalized, and confidence in downward inflation has increased significantly; 2. Employment is no longer “overheated” and the risk of employment deterioration is taken seriously; 3. Following the July FOMC, the risks of reaffirming the dual mandate have changed: the upward risk of inflation has weakened, while the downward risk of employment has increased. There is little doubt that interest rates will be cut in September, and subsequent interest rate cuts may continue to follow until the U.S. economy experiences significant downward pressure. Looking ahead to next year, the election results will have a greater impact on the pace of interest rate cuts. If Harris takes office, we may see more continuous interest rate cuts in the short term; but if Trump is elected, the Fed may have a wait-and-see attitude towards inflation due to the impact of additional tariffs. Maintain our judgment on various assets: U.S. stock market volatility intensified before the election, we are bullish on U.S. bonds, and non-U.S. currencies remain relatively strong relative to the U.S. dollar. The volatility of US stocks may intensify before the election, and another rebound before the election cannot be ruled out, but the rebound may still be a profit-taking window. (Golden Ten)