Galaxy Securities: Expectations for personnel changes at the Federal Reserve heat up, market bets on a rate cut in September

According to the Zhitong Finance APP, Galaxy Securities released a research report stating that on August 15, the U.S. and Russia will hold their first summit in four years. The U.S. has raised tariffs on India, leading to a pause in defense cooperation. Expectations for personnel changes at the Federal Reserve are rising, with the market betting on a rate cut in September, while the Bank of Japan hinted at a possible rate hike in the future. Domestic macro data continues to show mild improvement, with July's CPI remaining flat year-on-year, core CPI rising for three consecutive months, and PPI's decline narrowing, indicating the effects of policies to expand domestic demand. Foreign trade growth has reached a new high for the year, with both imports and exports achieving year-on-year growth. The Chinese capital market is seeing a warming sentiment under the interpretation of the "enhancing attractiveness and inclusiveness" policy, with the balance of margin trading in A-shares returning to 2 trillion. Commodity Market: (1) Gold: Last week, gold fluctuated and closed higher. The weakening U.S. labor market and rising expectations for a Federal Reserve rate cut pushed real interest rates down, while geopolitical risks and U.S.-India trade friction increased demand for safe-haven assets. The dollar index's retreat weakened exchange rate support. In the medium to long term, under conditions of stagflation, geopolitical uncertainty, and a potential rate cut cycle, gold still has upward potential. (2) Crude Oil: Last week, crude oil fluctuated and closed lower due to heightened concerns over demand from escalating U.S.-India trade friction, while improved U.S.-Russia relations reduced geopolitical risk premiums. OPEC+'s continued production increases added supply pressure. Although the dollar's temporary weakness provided some support, it was insufficient to counteract the weak fundamentals. In the medium to long term, enhanced global supply elasticity and economic slowdown pressures will keep oil prices under pressure, with no significant deterioration in geopolitical risks, and crude oil is expected to maintain a weak trend. Bond Market: (1) U.S. Treasuries: Last week, U.S. Treasury yields rose slightly as Federal Reserve officials maintained a cautious stance on monetary policy, weakening expectations for rapid rate cuts. Trump's tariff increases and personnel adjustments added policy uncertainty, pushing term premiums higher. In the medium to long term, economic slowdown and falling inflation will help lower real interest rates, benefiting U.S. Treasury valuations. However, fiscal deficits and geopolitical risks will limit significant declines in yields, with yields expected to gradually decrease but not rapidly fall. (2) Chinese Bonds: Last week, Chinese bond yields fell slightly due to July's CPI remaining flat, core CPI rising, and PPI's decline narrowing, indicating moderate inflation pressure that supports a moderately loose monetary policy. The central bank's large-scale reverse repos enhanced market expectations for easing, and S&P maintained China's credit rating stability, while foreign trade growth boosted market confidence, stabilizing demand for interest rate bonds. In the medium to long term, economic recovery and fiscal stimulus will support interest rates, but low inflation and loose policies will push yields down. The accelerated issuance of special bonds will bring supply pressure, limiting significant declines in yields. Foreign Exchange Market: (1) Dollar Index: Last week, the dollar index fell due to slower non-farm employment growth in the U.S. in July and an unemployment rate rising to 4.3%, reinforcing expectations for a rate cut in September. Personnel changes at the Federal Reserve also increased expectations for easing, putting pressure on the dollar. In the medium to long term, as the U.S. economy slows and the rate cut cycle approaches, the dollar faces weakening pressure. Increased fiscal deficits and government bond supply also undermine confidence, but due to weak recoveries in other countries, the dollar may experience fluctuations. (2) USD/JPY: Last week, USD/JPY fluctuated and rose. Despite weak U.S. employment data and a falling dollar index, the high yield on U.S. 10-year Treasuries maintained the interest rate differential advantage over Japan, supporting the dollar. Japan's economic and inflation data did not significantly strengthen rate hike expectations, and the rise in Japanese bond yields was limited, leaving the yen lacking rebound momentum. The cooling of risk aversion also weakened yen buying In the medium to long term, if the Federal Reserve cuts interest rates while Japan gradually raises them, the narrowing of the interest rate differential between the US and Japan will suppress the USD/JPY exchange rate. Equity Market: Major global stock markets have generally performed well. Weaker US non-farm payroll data has increased expectations for a rate cut by the Federal Reserve in September, boosting US stocks and global risk appetite. The earnings reports of US tech giants have generally exceeded expectations, particularly showing resilience in the fields of artificial intelligence and cloud services, further supporting market confidence. The Asia-Pacific region is driven by stable growth policies and a recovery in foreign trade. In the medium to long term, US stocks still have upside potential based on technological innovation and earnings resilience, but valuations are relatively high, and there is a risk of correction if the economy slows down