On Thursday (September 18), the Federal Reserve announced a 25 basis point reduction in the benchmark interest rate to 4.00%-4.25%, marking the first rate cut since December of last year. The dot plot indicates that officials generally expect two more rate cuts by the end of the year, each by 25 basis points, with another cut in 2026, which is significantly lower than the current market expectation of three rate cuts.
In the post-meeting statement, the FOMC again described economic activity as &#34;slowing,&#34; but added the phrase &#34;slowing job growth,&#34; pointing out that labor market indicators show substantial downside risks, and stated that the likelihood of &#34;tariff-induced inflation&#34; being stubbornly persistent has decreased. In summary, Powell defined this rate cut action as risk management, but the Federal Reserve clearly no longer views inflation caused by tariffs as the top threat, instead prioritizing concerns about a slowing labor market, indicating that stagflation risks have given way to employment worries.
Powell stated that this move does not mean the beginning of a long-term rate-cutting cycle, which dampened market bullish sentiment. The three major U.S. stock indices had mixed results, with the Dow rising 0.57%; the S&amp;P 500 falling 0.1%; and the Nasdaq declining 0.33%; the China Golden Dragon Index surged 2.8%. Large tech stocks had mixed results, with Nvidia down 2.62%, Amazon down 1.04%, Google A down 0.65%, Meta down 0.42%, Microsoft up 0.19%, Apple up 0.35%, and Tesla up 1.01%.
The U.S. dollar index rebounded, rising 0.37% to recover 97.0, while the euro/dollar pair rose and then fell, down 0.46%, but still stabilized above 1.1800; gold fell 0.83%, briefly reaching a historic high of $3,707, but then plummeted $60 to around $3,650; WTI crude oil initially fell 0.9%, ending a three-day rise. The dollar/yen rebounded to challenge 147.0; Bitcoin fell 0.13%, while Ethereum rose 2.24%, ending a four-day decline.
<h3>Macro News</h3>
U.S. Retail Data Exceeds Expectations, Tariffs Driving Up Prices as a Partial Reason
Data shows that U.S. retail sales in August increased by 0.6% month-on-month, far exceeding expectations, partly due to tariffs pushing up product prices rather than an actual increase in sales volume. Sam Bullard, a senior economist at Wells Fargo, stated that while consumer spending shows some inherent resilience, the overall growth rate is slowing. Households still have overall purchasing power, but concerns about the labor market are increasing, which suggests that the pace of consumer growth may slow for the remainder of the year.
Federal Reserve's Mouthpiece: Focus on Policy Signals from the Remaining Two Meetings This Year
Nick Timiraos, a journalist known as the &#34;mouthpiece of the Federal Reserve&#34; at The Wall Street Journal, wrote that the Fed's 0.25% rate cut this week has basically become a foregone conclusion, and investors will focus on whether Powell will further advance his recent shift in stance. Investors will also closely monitor a key message: whether Powell and Federal Open Market Committee (FOMC) officials will set the total number of rate cuts for this year at three, meaning consecutive cuts in October and December; or maintain the expectations from June, when the labor market appeared more robust, and a minority of officials anticipated two rate cuts
Last month, Powell expressed greater concerns about the job market than some of his Federal Reserve colleagues in a highly anticipated speech. The current question is whether Powell will further reinforce this concern following the weak non-farm payroll report released in August, and if he does, it will validate the market's expectations for continued interest rate cuts in the upcoming meetings. The debate over the pace of rate cuts also depends on another related issue, namely, what the neutral level is in the current environment.
Trump appoints Miran to the Federal Reserve Board, appeals court rejects Trump's attempt to remove Cook
Trump stated that he signed a document appointing Stephen Miran, the chairman of the White House Council of Economic Advisers, to the Federal Reserve Board, after Miran was confirmed by the Senate to serve as a Federal Reserve governor.
On the other hand, the U.S. Court of Appeals for the District of Columbia rejected President Trump's decision to remove Federal Reserve governor Lisa Cook, meaning she can currently remain in her position and will attend the Federal Reserve's two-day meeting starting Tuesday (16th).
Trump speaks with Modi, U.S.-India trade negotiations resume
The United States and India announced that their trade negotiation representatives held positive talks in New Delhi on Tuesday. Following the one-day discussions, the Indian government stated that both countries agreed to intensify efforts to reach a trade agreement. Trump mentioned that he just spoke with Indian Prime Minister Modi, who also confirmed that he had spoken with Trump. The Indian government stated that the discussions were positive and future-oriented, covering all aspects of the trade agreement.
The U.S. Embassy in New Delhi stated in another announcement that U.S. Assistant Trade Representative Brendan Lynch held positive meetings with India's chief negotiator Rajesh Agrawal to discuss the next steps in bilateral trade negotiations. Following Trump's imposition of a 50% tariff on India last month, both sides are seeking to ease tensions.
UK to announce closer cooperation with the U.S. on cryptocurrency
According to informed sources, the UK and the U.S. will announce deeper cooperation in the field of digital assets such as cryptocurrencies, thereby bringing the UK closer to the U.S. after Trump's embrace of the industry. Sources indicated that UK Chancellor of the Exchequer Rishi Sunak and U.S. Treasury Secretary Janet Yellen discussed efforts to establish closer transatlantic collaboration on digital assets and capital markets on Tuesday. Participants included cryptocurrency companies Coinbase, Circle, and Ripple, as well as Citibank, Bank of America, and Barclays.
One source indicated that the agreement was reached at the last minute. Before Trump's state visit to the UK this week, cryptocurrency industry organizations sent a letter to the UK government last Thursday urging the inclusion of digital assets and blockchain in any new agreements with the U.S., after which both sides arranged for talks. Any deal is expected to specifically include stablecoins—cryptographic tokens pegged to traditional currencies.
Oracle's stock rises, fueled by hopes of a TikTok deal playing a key role
U.S. Treasury Secretary Scott Bessent earlier stated that Washington and Beijing have reached a framework agreement regarding TikTok, and the social media platform may be acquired by U.S. buyers, with widespread expectations that Oracle Chairman Larry Ellison will be involved
American database company Oracle saw its stock price rise by 5.9% on Tuesday, reaching a high of $319.97. The market is optimistic that Oracle may be chosen to play a significant role in the TikTok transaction due to the U.S. government's ongoing focus on data security, contributing to data storage, security regulation, and compliance.
<h3>Market Overview</h3>
U.S. Stocks: U.S. stocks fell across the board, with the Dow Jones down 0.27%; the S&amp;P 500 down 0.13%; and the Nasdaq down 0.07%.
European Stocks: European markets generally declined, with the German DAX 30 index down 1.77%. The French CAC 40 index fell 1%. The UK FTSE 100 index dropped 0.88%.
Bond Market: The yield on the U.S. 10-year benchmark Treasury bond is approximately 4.03%, unchanged from the previous trading day.
Commodities: Gold rose 0.29%, priced at $3,689 per ounce. WTI crude oil increased by 2.01%, priced at $64.5 per barrel.
Foreign Exchange: The U.S. dollar index fell 0.71%, reported at 96.6. The USD/JPY decreased by 0.65%, while the EUR/USD rose by 0.9%.
Cryptocurrency: Bitcoin increased by 1.26% in the last 24 hours, currently priced at $116,734. Ethereum decreased by 0.48% in the last 24 hours, currently priced at $4,510.
Hong Kong Stocks: The Hang Seng Index night market futures closed at 26,612 points, up 148 points, compared to the previous day's closing of 26,438 points, with a premium of 173 points and a turnover of 14,834 contracts. The National Index night market futures closed at 9,465 points, with a premium of 79 points compared to the previous day's closing.
<h3>Global Company News</h3>
Microsoft Announces $30 Billion Investment in the UK Over the Next Four Years
As Trump makes a state visit to the UK this week, Microsoft is ramping up its investment in artificial intelligence (AI) in the UK. The company announced that it will invest $30 billion in the UK between 2025 and 2028, including $15 billion in capital expenditures to build data centers and the UK's largest supercomputer.
On Wednesday, Trump is expected to sign a new agreement with UK Prime Minister Keir Starmer to collaborate on AI, quantum computing, and nuclear technology. Microsoft President Brad Smith emphasized the importance of a favorable business environment. Smith stated that Microsoft's ability to make such a large investment is largely due to the UK government's efforts in reforming planning, enhancing power capacity, and creating a more stable and open regulatory environment.
CrowdStrike Partners with NVIDIA to Develop AI Agents
American cybersecurity company CrowdStrike announced on Tuesday that it is partnering with NVIDIA to combine its Charlotte AI AgentWorks with NVIDIA Nemotron, creating an open AI model and expanding the Falcon platform to provide security and governance for AI agents developed using NVIDIA's NeMo tools and those built within third-party ecosystems
CrowdStrike stated that it will expand the company's full lifecycle protection for language learning models designed within the Nvidia Enterprise AI Factory, and will help companies securely build, deploy, and scale autonomous agents in critical mission security operations and enterprise applications.
Eli Lilly invests $5 billion to build a factory in the U.S. to expand production capacity for targeted cancer drugs and other therapies
On Tuesday Eastern Time, American pharmaceutical giant Eli Lilly announced that it will invest $5 billion to build a production facility in Goochland County, Virginia, to enhance the production of active pharmaceutical ingredients and formulations for high-end therapies such as targeted cancer drugs. After the U.S. stock market closed, Eli Lilly's stock price rose by over 2.2%. Eli Lilly stated that the new factory will be used to produce active ingredients for drugs that treat cancer and autoimmune diseases, as well as other advanced therapies. Eli Lilly emphasized that the factory will significantly enhance the domestic production capacity of antibody-drug conjugates (ADC). Eli Lilly indicated that the Virginia factory will utilize advanced technologies, including machine learning and artificial intelligence, to achieve a &#34;one-time success&#34; production process, ensuring a safe and reliable supply of pharmaceuticals.
<h3>Today's Key News Preview</h3>
UK August CPI month-on-month
UK August Retail Price Index month-on-month
Eurozone August CPI year-on-year final value
U.S. August total housing starts annualized
U.S. August total building permits
Bank of Canada announces interest rate decision
U.S. EIA crude oil inventories for the week ending September 12
Bank of Canada Governor Macklem holds a press conference
Federal Reserve FOMC announces interest rate decision and economic projections summary
Federal Reserve Chairman Powell holds a monetary policy press conference
Trump interviews with Fox News in the UK

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The Federal Reserve lowered interest rates as expected by 25 basis points to 4.00%-4.25%, with two more rate cuts anticipated within the year, emphasizing that the risk of slowing employment is greater than inflation. Powell stated that the rate cut is not part of a long-term cycle. The three major U.S. stock indices showed divergence, with technology stocks fluctuating. The U.S. dollar index rebounded, gold retreated from its highs, crude oil ended its consecutive rise, Bitcoin slightly declined, and Ethereum rebounded

- On September 18, the Federal Reserve announced a 25 basis point cut in the benchmark interest rate to 4.00%-4.25%, marking the first reduction since December.  
- The Fed's dot plot indicates two more rate cuts by year-end and one in 2026, which is below market expectations.  
- Despite concerns over a slowing labor market, Powell emphasized that the Fed no longer views tariff-induced inflation as the primary threat, shifting focus to employment worries.

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September 18 Financial Breakfast: The Federal Reserve cuts interest rates by 25 basis points, with two more cuts expected this year! Gold plummets by $60, and the dollar rebounds to recover 97.0