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on september 18, local time, the u.s. federal reserve announced that it would lower the target range of the federal funds rate by 50 basis points (bp) to a level between 4.75% and 5.00%. this is the first interest rate cut by the fed in four years.

several securities industry insiders said that after the 50bp rate cut in september, there may still be room for a 50-75bp rate cut this year. the fed's rate cut will open up space for other countries, including china, to continue to lower policy interest rates. for the global equity market, a-shares may usher in better allocation opportunities after the fed's rate cut cycle begins.

cicc: three types of chinese assets may benefit

li qiusuo, chief domestic strategy analyst at cicc research department, believes that the fed’s interest rate cut may be beneficial to the performance of chinese assets to a certain extent, but the core of the trend of stabilization of my country’s market, especially a-shares, still lies in its own fundamental conditions.

at the same time, li qiusuo pointed out that the fed's rate cut may have a greater impact on hong kong stocks, which are more sensitive to external liquidity, than a-shares. he further analyzed that the current valuation of the a-share market is already at a relatively extreme position, and trading and behavior have also shown the common bottom-biased characteristics in history. in this context, the fed's rate cut will help stabilize investors' risk appetite to a certain extent, but the market performance in the future may need to pay more attention to the marginal changes in my country's stable growth policy and whether there is hope for improvement in fundamental expectations in the medium term.

as the fed begins to cut interest rates, li qiusuo suggests paying attention to the performance of three types of a-share assets: 1) foreign-invested stocks. the fed's interest rate cut may continue to promote global capital reconfiguration. against this background, it may have a marginal impact on the flow of foreign capital to a-shares. pay attention to foreign-invested a-shares, especially leading companies in the fields of new energy, food and beverage, home appliances, automobiles, electronics, and mechanical equipment. 2) companies that may benefit from the appreciation of the rmb. if the interest rate cut brings about a weak dollar, the rmb is expected to appreciate against the us dollar, and companies with more us dollar loans will have less repayment pressure and are more likely to benefit. pay attention to areas such as non-ferrous metals, especially some companies in gold, electronics, agriculture, forestry, animal husbandry, and trade and retail industries; if the rmb appreciates, companies that are expected to generate exchange gains are also worth paying attention to; 3) there may be periodic opportunities for targets with high policy sensitivity. if the fed's interest rate cut eases external policy constraints and the policy of stabilizing growth is increased, the areas that may benefit are also worth paying attention to, such as finance, real estate chain, and some consumption. the direction and intensity of my country's policy response need to be observed in the future.

huatai securities: opening up space for domestic monetary policy

yi he, chief macroeconomist of huatai securities, said that overall, the fed started the interest rate cut cycle with a 50bp cut, catching up with the rate cut pace of other major central banks; the 50bp cut did not cause market panic; it is expected that the fed will continue to cut interest rates, but the "step size" of 50bp may not be the norm.

looking ahead, yi he predicts that the federal reserve will continue to push for interest rate cuts in the future, with the cumulative rate cuts expected to reach 100~125bp this year (remaining 50~75bp); the fed's rate cuts will also open up space for other countries to continue to lower their policy interest rates, including china.

the 50bp rate cut in september shows that the fed's policy focus has shifted from reducing inflation to preventing the job market from cooling down too quickly. it is expected that the fed will continue to push for rate cuts in the future, with a possible 25bp cut in november and december, or a 50bp cut at a time and a 25bp cut at a time, depending on the economic situation. there is a certain degree of uncertainty in the extent of the rate cut in 2025, which will be affected by the results of the general election.

yi he believes that the federal reserve's launch of a sustained interest rate cut cycle is expected to further alleviate the pressure of foreign exchange outflows on the rmb exchange rate caused by interest rate differentials and open up domestic monetary policy space.

industrial securities: the interest rate cut has landed, and subsequent assets may enter a cooling-off period after the frenzy

zhuo hong, head of overseas macroeconomics at the macroeconomics team of industrial securities economic and financial research institute, said that the rate cut has landed, and subsequent assets may enter a cooling-off period after the frenzy. in the past month, rate cut trading has been the main logic of the market, with asset performance showing a rise in both stocks and bonds and a weakening of the us dollar. however, we have repeatedly pointed out that the timing of rate cuts may be a turning point in the market trading logic - the us bonds that were clearly ahead of the curve may have been fully priced, and the expectation of a better economy in the future may even drive bond yields up.

zhuo hong pointed out that the stock index and earnings drivers of the us stock market may also face a switch. the asset performance on the day of the us interest rate cut also confirmed this logic. after the interest rate cut, the 10-year us treasury yield rose to 3.71% at the close, while the three major us stock indexes all turned down. looking forward, after the interest rate cut game eases, the market may calm down for a short time, and will return to data sensitivity in the future. after a large interest rate cut, the judgment of whether there is a recession may once again become an important clue for trading.

zheshang securities: a big interest rate cut will help achieve a "soft landing"

li chao, chief economist of zheshang securities, said that after the substantial interest rate cuts, the resilience of the u.s. economy and inflation will be further enhanced. while achieving a "soft landing" within the year will also to a certain extent constrain the room for subsequent interest rate cuts.

li chao predicts that the fed will cut interest rates by 100bp this year, and by 25bp in november and december respectively, which is in line with the guidance of the current dot plot, but the room for interest rate cuts in 2025 may not reach 100bp as shown by the current dot plot.

li chao believes that the structure of the u.s. stock market may switch, and the u.s. dollar and u.s. bond yields will gradually bottom out and rebound. as for the u.s. dollar, after this round of global resonance enters the interest rate cut cycle (except japan), the u.s. dollar will maintain a high degree of resilience. the reason is that the u.s. fiscal space has a significant advantage over major economies, especially europe. leveraging fiscal tools can also enable monetary easing to have a higher multiplier effect. after the interest rate cut is implemented, the u.s. economy will still maintain a relative advantage, thereby helping the u.s. dollar maintain resilience. as for u.s. bonds, considering that the pricing of interest rate cuts this year has been relatively sufficient, in 2025, both trump and harris' policies may increase the pressure of u.s. re-inflation and constrain the space for further widening of the current round of interest rate cuts. it is difficult for the 10-year u.s. bond interest rate to fall further.

he pointed out that the fed's interest rate cut also left room for china's domestic monetary policy, the pressure on the rmb exchange rate against the us dollar was significantly reduced, and the external pressure on the prices of chinese stocks, bonds and other assets was further alleviated.

caitong securities: there is still at least 50bp of interest rate cuts this year

chen xing, chief macro analyst at caitong securities, said that after the fed's decision was announced, the three major u.s. stock indexes rose first and then fell, u.s. bond yields fell, and the u.s. dollar index fell in the short term. on the one hand, the risks in the job market are prominent, the number of new non-agricultural jobs has been decreasing for a long time, the unemployment rate has risen, the wage growth rate has slowed down, and the fatigue of the u.s. job market has gradually emerged; on the other hand, price pressures are easing. u.s. economic activities remain healthy but slow down overall, real consumer spending remains strong, income has slowed down, and production and trade activities remain stable.

chen xing believes that the us economic growth will continue to slow down in the future, and as the job market continues to cool, the federal reserve may still cut interest rates by at least 50bp this year.

huafu securities: global equity assets may usher in better allocation opportunities

yan xiang, chief economist of huafu securities, said that after the start of this round of interest rate cuts, u.s. treasury bond interest rates may fluctuate in the short term, and u.s. stocks will be in a stage of digesting relatively high valuations in the short term. medium- and long-term interest rate cuts are still interpreted as a positive factor. the u.s. dollar may benefit from the resilience of the u.s. economy and has limited downside space.

yan xiang pointed out that for the global equity market, after the fed's interest rate cut cycle started, there may be better allocation opportunities. since the beginning of the year, under the siphon effect of the strong dollar and us stocks, the valuations of global equity markets, especially emerging markets including china, have generally been low. looking forward, the fed has started a cycle of interest rate cuts, which corresponds to more room for easing by global central banks. in addition, compared with the us stock market, other markets, especially emerging markets, are at a relatively low valuation level, and the global equity market may usher in better allocation opportunities.

guosheng securities: this round of interest rate cuts will end in 2026

xiong yuan, chief economist of guosheng securities, believes that the fed's 50bp rate cut is slightly higher than market expectations, but powell's speech was hawkish, saying that the scale of this rate cut is not normal.

after the meeting, the fed's interest rate cut expectations implied by interest rate futures have not changed much. the market still expects an 80% probability of another 75bp rate cut this year, and a nearly 100% probability of another 175bp rate cut before june 2025. it is worth noting that the dot plot has added a new interest rate unchanged in 2027, which means that this round of interest rate cuts will end in 2026, xiong yuan mentioned in the research report.

judging from the changes in asset prices and interest rate cut expectations after this meeting, xiong yuan pointed out that the market showed a risk-off mode. on the one hand, this was due to powell's hawkish speech, and on the other hand, this substantial interest rate cut should have strengthened the market's concerns about the us recession. given that it takes time to disprove the recession expectations and the us election will be held on november 5, the prices of major asset classes may fluctuate greatly in the short term. we should keep a close eye on the actual performance of various data such as the us economy, inflation, and employment, as well as the progress of the election.

founder securities: the election is the biggest variable in the future path of interest rate cuts

lu zhe, chief economist of founder securities, believes that due to greater concerns about the downward trend in growth and the weakening of the labor market, and greater confidence in the return of inflation to the target, the fed chose to start the interest rate cut cycle at 50bps, and indicated in the dot chart that there will be four interest rate cuts this year and next year. at the same time, at the press conference, powell did not rigorously prove the rationality of the 50bps interest rate cut, but also said that future interest rate cut decisions are still flexible, so 50bps is not a new rhythm of interest rate cuts.

looking ahead, lu zhe believes that the election is still the biggest variable in the future path of interest rate cuts. if trump comes to power, the stronger economic resilience and inflation stickiness expectations may reduce the fed's room for future interest rate cuts. but no matter who comes to power, the current market expectations of three or even eight interest rate cuts this year and next year are too optimistic.