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federal reserve officials have been speaking out intensively, sending out important signals.

on the evening of september 23rd, beijing time, atlanta fed president bostic, a voting member of the 2024 fomc (federal open market committee) and said in his latest speech that he fully supports a 50 basis point rate cut in september, arguing that inflation has improved and the labor market has cooled faster than expected; chicago fed president goolsbee, a voting member of the 2025 fomc and and said that more rate cuts may be needed in the coming year and interest rates need to fall significantly.

on the same day, kashkari, a 2026 fomc voter and president of the minneapolis fed, said in a speech that the fed's policy remains tight after cutting interest rates by 50 basis points last week, and is expected to cut interest rates by another 50 basis points this year. the three major u.s. stock indexes rose slightly in early trading. as of 22:30 beijing time, the nasdaq rose 0.32%, the s&p 500 rose 0.32%, and the dow rose 0.14%.

it is worth noting that hedge funds are rushing into the largest technology stocks, stimulated by the federal reserve's 50 basis point interest rate cut last week. according to the latest report from goldman sachs group, hedge funds bought u.s. technology, media and telecommunications stocks at the fastest rate in four months last week. the large brokerage firm pointed out that hedge funds' long positions in bullish information technology stocks are almost three times the long positions in bearish information technology stocks.

the fed speaks out

on the evening of september 23rd, beijing time, bostic, a 2024 fomc voting member and president of the atlanta fed, delivered a speech on the economic outlook. he said he fully supported a 50 basis point rate cut in september, citing faster-than-expected improvements in inflation and a cooling of the labor market.

“the progress of inflation and the cooling of the labor market have been much faster than i thought at the beginning of the summer,” bostic said. “i now see a path to normalize monetary policy sooner than i expected.”

bostic acknowledged that his "concerns" about inflation could lead him to support a smaller rate cut. but he added that a 25 basis point cut "would mask the growing uncertainty about labor market slack." starting the central bank's rate-cutting cycle with a big move would help get rates closer to neutral as risks between inflation and employment become more balanced.

bostic also said the u.s. economy is returning to normal quickly and needs more normal interest rates. with inflation approaching the fed's target and the labor market more balanced, it is time to return interest rates to a neutral level.

bostic said officials should not commit to large-scale measures given uncertainty about the so-called neutral interest rate - where the fed neither stimulates nor slows the economy - and concerns that inflation could return.

bostic pointed out that the fed must monitor employment "very vigorously". the u.s. labor market "has not shown obvious warning signs" and is optimistic about the future outlook. it is expected that the unemployment rate will not rise further significantly.

as interest rates fall, the fed will get more involved in using models and surveys of consumers and businesses to estimate the neutral rate, bostic said.

“while the recent decision to begin removing restrictions on monetary policy is significant, this move does not imply a rhythm for next moves,” bostic said. “as in any context, our approach to policymaking will be guided by incoming data, input from business contacts, the evolving outlook, and the balance of risks.”

later, goolsbee, a 2025 fomc voting member and president of the chicago fed, also sent an important signal in his speech. he said that more interest rate cuts may be needed in the coming year and interest rates need to fall significantly.

goolsbee pointed out that inflation has fallen sharply from its peak and the labor market has reached full employment. he was satisfied with the fed's 50 basis point rate cut, which showed that the fed was concerned about employment risks rather than just inflation. the unemployment rate is trending upward in direction, but the level is still low.

“another 50 basis point rate cut”

on the same day, kashkari, a 2026 fomc voting member and president of the minneapolis fed, said in a speech that the fed's policy remains tight after a 50 basis point rate cut last week, and it is expected to cut interest rates by another 50 basis points this year.

he expects the fed's policy rate to be 4.4% at the end of 2024 and further drop to 3.4% at the end of 2025, which is consistent with the median forecast of fed fomc officials. the future interest rate path will depend on the overall performance of the upcoming data.

kashkari said that the fed's future interest rate cuts are expected to be smaller, and a 25 basis point or 50 basis point cut is a reasonable option. it is expected that there will be two more 25 basis point cuts this year.

kashkari also said that he supports the decision to cut interest rates by 50 basis points last week, that inflation has cooled significantly, and that the current risks are leaning toward a softening of the u.s. labor market. rising unemployment is a greater risk than inflation, and he hopes to restore the unemployment rate to 3.5%.

kashkari believes that a 50 basis point rate cut is an important step in boosting the u.s. economic recovery. the election will not affect the fed's interest rate decision.

kashkari, who has long been seen as one of the more dovish officials within the fed, suggested before the fed's september rate decision that the labor market might be too slack, which could make a september rate cut appropriate.

fitch said that in this round of easing cycle, the fed's interest rate cuts may still remain moderate overall, and it is expected that the fed will cut interest rates by 25 basis points at each of the november and december meetings; it is expected that the us federal funds target rate (upper limit) will fall to 4.5% by the end of this year, to 3.5% by the end of 2025, and to the neutral level of 3.0% in june 2026.

deutsche bank analysts also believe that the fed may continue to cut interest rates, but the magnitude will not be as large as expected.

funding is pouring in

hedge funds are piling into the biggest technology stocks, spurred by the federal reserve's massive 50 basis point rate cut last week.

hedge funds bought u.s. technology, media and telecom stocks at the fastest pace in four months last week, according to goldman sachs group inc.'s prime brokerage weekly report ending september 20.

the major brokerage firm noted that hedge funds' long positions on bullish information technology stocks are almost three times as large as their long positions on bearish ones.

the goldman report noted that buying of semiconductor and related equipment companies outweighed selling of technology hardware companies such as computer, display and hard drive makers.

hedge funds also dumped short positions and increased long bets on interactive media and entertainment companies, the report said. the broader technology and media sector now accounts for nearly a third of overall u.s. net portfolio exposure.

the report pointed out that for the first time in four weeks, selling of non-essential consumer goods stocks such as u.s. hotels and restaurants exceeded buying, and the sector suffered the largest net sell-off in a year.

total leverage, or the total amount of hedge funds borrowing and investing, reached about 278%, the highest level this year, the report said.

cicc believes that, at present, the unconventional rate cut of 50 basis points will still make the market worry about whether future growth will face greater pressure in the short term. therefore, the next few economic data are crucial and will determine the tilt between the scales of recession trading (us bonds, gold), loose trading (stocks and bonds are bullish, growth stocks lead) and repair trading (late cycle leads, such as real estate and industrial metals). if the data does not deteriorate significantly, it will convey to the market a combination of "enough rate cuts and a good economy", reaching a new balance, and the subsequent market main line may turn to repair trading after the rate cut.