Federal Reserve Director Milan advocates a sharp cut in interest rates, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on September 29

Global Market Review

1. European and American market trends

The three major U.S. stock index futures rose, Dow futures rose 0.42%, S&P 500 futures rose 0.45%, and Nasdaq futures rose 0.56%. The German DAX index rose 0.15%, the UK FTSE 100 index rose 0.55%, the French CAC40 index rose 0.05%, and the European Stoke 50 index rose 0.06%.

2. Market news interpretation

Federal Director Milan advocates a sharp rate cut, saying that Trump's policy will lower neutral interest rates

⑴ New Fed Director Stephen Milan calls for a sharp rate cut, and his views are based on Trump's economic plan to quickly lower the general interest rate levels in a healthy economy. ⑵Milan believes that the current economy is at a critical turning point. If interest rates are maintained far higher than his estimates have dropped to near zero, the Federal Reserve may face the risk of a job market split. ⑶ He said his colleagues were "still very worried about tariff inflation", and he believed policymakers should pay attention to administrative border and fiscal policies that would lower neutral interest rates. ⑷ This view is different from the general perceptions of other analysts and central bank officials about current policies and neutral rates, which estimate neutral rates are about one percentage point higher than Milan. ⑸ Former St. Louis Fed Chairman Brad questioned why inflation has not fallen more rapidly if monetary policy is really deviated as Milan said. ⑹ Milan, who served as chairman of Trump's economic advisory board, admitted that his views may be "optimistic", but insisted that forecasters did not fully evaluate the impact of immigration policies on rents. ⑺ Despite doubts about its reasoning, Milan's position opened up aboutTrump shapes discussions more in line with his views on the potential possibility of the Federal Reserve. ⑻Milan argues that neutral interest rates are falling. Considering the Fed's 2% inflation target, the policy interest rate should be between 2.00% and 2.50%, which is about two percentage points away from the current range of 4.00%-4.25%. ⑼He suggested a quick cut of interest rates to neutral levels at a pace of half a percentage point each time. ⑽Powell and other policy makers are cautious about this, emphasizing that policy positions should be evaluated through actual economic performance rather than model predictions. ⑾The latest research cited by Milan shows that emerging trends such as deglobalization and capital demand for artificial intelligence may push up neutral interest rates, and if multiple potential risks develop at the same time, a "sharp reversal" may occur. ⑿Milan's own calculations show that according to the implementation of Trump's policies, the interest rate for the Fed's appropriate policy may be as low as 1.69% or as high as 2.76%.

UK Treasury bonds keep rising Long-term bonds lead the rise

After British Chancellor Reeves delivered a speech at the Labor Party meeting, British Treasury bonds maintained their earlier gains, while long-term bonds led the rise. UK bond yields fell 2-4 basis points across the board; 30-year bond yields fell 4 basis points to 5.52%.

The British Finance Minister and the Finance Military Order defends market confidence and refuses to lose control of expenditure

⑴ British Finance Minister Reeves solemnly promised at the Labor Party Annual Meeting on Monday that he will never let down the people's trust in economic governance, emphasizing that the out-of-control expenditure will immediately lead to the collapse of market confidence. ⑵ She clearly warned her colleagues in the party who called for relaxation of fiscal rules that loss of market confidence will occur instantly when spending is out of control. ⑶ Faced with the upcoming tests in the xn--xm-6d1dw86k.coming months, Reeves pointed out that global headwinds and long-term shortcomings are making the decision-making environment increasingly severe. ⑷ She vowed to always take the country's progress as the direction in budget decisions and never bet on the trust given by the British people. ⑸Reeves particularly emphasized that the core task of the second year of his administration was to rebuild a recovery economy, and all policy choices will serve this goal.

Inflation expectations fell slightly. Brazilian real showed resistance to decline.

⑴ The latest survey by the Brazilian Central Bank showed that economists lowered the IPCA inflation expectations in 2025 from 4.83% to 4.81%, and the forecast for 2026 dropped slightly from 4.29% to 4.28%. ⑵ The benchmark interest rate expectation remains stable, the Selic interest rate remains unchanged by the end of 2025, and the expectation is still anchored at 12.25% by the end of 2026. ⑶ The economic growth forecast has not been adjusted. The GDP growth rate in 2025 is expected to remain at 2.16%, and the forecast for 2026 will continue to lock in 1.80%. ⑷ The exchange rate outlook showed a slight improvement. The real-time exchange rate expected to tighten from 5.50 to 5.48 at the end of 2025, and the expected to be raised from 5.60 to 5.58 at the end of 2026.

The yield on the UK 10-year Treasury bond fell to 4.72% before the Finance Minister's speech. The market stabilized.

⑴The yield on the UK 10-year Treasury bond fell to 4.72%, and was announced by the Secretary of Finance Rachel Reeves at the Labor Party meeting.Provide a calmer market background before the speech. ⑵ But after two weeks of higher yields, borrowing costs are still at high levels, with the 30-year yield hitting its high since 1998 earlier this month. ⑶Reeves spoke with a cautious tone, implying that further tax increases may be needed in the budget on November 26, and promised not to increase income tax, value-added tax, national insurance or corporate tax. ⑷ She cited the possible reduction of productivity forecasts by Trump’s Office of Tariffs, Global Conflict and Budget Responsibility as risk factors, emphasizing that fiscal discipline is "critical" to stability. ⑸Reeves reiterated the rules for balancing daily expenditures by 2029, which excluded the possibility of a separate wealth tax, but left room for other tax increases. ⑹After a record tax increase last year, this move has caused concern for xn--xm-6d1dw86k.companies. ⑺The UK economy is expected to expand below 1.5% in 2025, with inflation likely to reach 4% in September, double the Bank of England’s target.

Palestine's economic growth in the second quarter was 4.7% slower than the previous quarter

⑴Palestine's economic growth in the second quarter of 2025 was 4.7% year-on-year, slowing down from 9.1% in the first three months, marking the second consecutive quarter of economic growth. ⑵Slow growth rate was mainly dragged by a 0.8% contraction in agriculture, forestry and fisheries, a 4.2% decline in mining and quarry industries, and a 3.4% decline in transportation and warehousing industries. ⑶ Construction output increased by 21.4%, wholesale and retail trade increased by 5.9%, and finance and insurance increased by 13.6%. ⑷ The information and xn--xm-6d1dw86k.communications industry grew by 6.6%, the service industry grew by 6.4%, and the public management and defense sectors grew by 1.8%. ⑸After quarterly adjustment, GDP fell by 0.5% month-on-month, xn--xm-6d1dw86k.compared with a decrease of 0.9% in the first three months.

The Japanese government raised its economic assessment and showed signs of improvement in consumption and capital expenditure

⑴ The Japanese government said on Monday that the economy is recovering moderately, but the impact of U.S. trade policy on the automotive industry is particularly obvious. ⑵ Although the views on private spending and capital expenditure have been raised, it reminds U.S. trade policy may bring downside risks to the economic outlook. ⑶ Japan's economic growth from April to June was faster than expected, expanding for the fifth consecutive quarter. ⑷ The Cabinet Office pointed out in its monthly report that "although the impact of US trade policy is mainly reflected in the automotive industry, the Japanese economy is recovering moderately." ⑸ The United States agreed to impose a 15% tariff on Japanese imported goods, which is lower than the initial threatened tax rate, but is still far higher than the previous level of 2.5%. ⑹The government has raised its assessment of consumer spending for the first time since August 2024. ⑺The report said that consumer confidence improved after the US tariff agreement, and private consumption, which accounts for more than half of the economy, showed "signs of recovery". ⑻Capital expenditure has "moderately recovered" due to digital investment and mechanical equipment growth, the first time it has been raised since March 2024.

Saudi Arabia is expected to raise the official price of crude oil sold to Asia in November

⑴ Saudi Arabia, the world's largest oil exporter, is expected to raise the official price of crude oil to Asian buyers in November to track the rise in the Middle East benchmark oil prices. ⑵ Six refining industry sourcesIt said that the official price of flagship Arab light crude oil in November may be raised by 20-40 cents per barrel to the range of $2.40-2.60 per barrel. ⑶ Survey shows that the official price of other grades of crude oil such as Arabet light, medium and heavy in November may rise by 30-60 cents per barrel xn--xm-6d1dw86k.compared with October. ⑷Dubai's premium to swap has risen by 52 cents per barrel per month so far in September, consistent with the forecast. ⑸ The premium hit a six-month high of $3.63 per barrel on September 15 as supply risks posed by potential restrictions on Russia and Iran increased. ⑹But market rally lost momentum last week as news of the Iraqi Kurdish region resumed crude oil exports intensified concerns about oversupply. ⑺A respondent said Saudi Arabia may avoid a significant price increase as regular supply negotiations with customers in 2026 are still underway, while rising freight rates also limit the refineries’ ability to pay higher oil prices. ⑻OPEC+ may approve another increase of at least 137,000 barrels per day at its Sunday meeting, as rising oil prices encourage it to seek higher market share. ⑼ The official price of Saudi crude oil is usually released around the 5th of each month, setting a trend for oil prices in Iran, Kuwait and Iraq, affecting about 9 million barrels per day of crude oil shipped to Asia. ⑽Saudi Aramco sets crude oil prices based on customer recommendations and based on changes in crude oil value in the past month (calculated based on yield and product prices). ⑾ Saudi Aramco officials do not xn--xm-6d1dw86k.comment on the country's monthly official price according to policy.

The net increase in consumer credit in the UK in August was 1.69 billion pounds slightly higher than expected

⑴ The net borrowing of consumer credit in the UK increased to 1.69 billion pounds in August, and was 1.67 billion pounds after the upward revision in July, and higher than the market's expected increase of 1.6 billion pounds. ⑵ Among them, net credit card loans dropped slightly to 700 million pounds, xn--xm-6d1dw86k.compared with 800 million pounds in July. ⑶ Net borrowing in consumer credit through other forms such as auto dealer financing and personal loans rose slightly to £1 billion, xn--xm-6d1dw86k.compared with £900 million in July. ⑷ Overall annual growth rate of consumer credit in August rose slightly to 7.1% from 7.0% in July. ⑸ The annual growth rate of credit card loans rose from 10.1% to 10.5% during the same period, and the annual growth rate of other forms of consumer credit increased slightly from 5.6% to 5.7%.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:23 Beijing time, the euro/USD rose, and is now at 1.1724, an increase of 0.19%. Before the New York Stock Exchange, the price of (EURUSD) fell in the last intraday trading. As expected in our morning report, the relative strength indicators began to form a negative divergence and negative signals appeared, creating downward pressure on the price, while the key resistance level 1.1730 remained stable, the price continued to be below its EMA50 moving average and was dominated by bearish correction waves in the short term. If the price breaks through the current resistance level, the possibility of a price rebound in the near future still exists.

British Pound/USD: As of BeijingAt 20:23, GBP/USD rose and is now at 1.3441, an increase of 0.28%. Before the New York Stock Exchange, the (GBPUSD) price continued its uptrend in the last day trading, trying to regain some of its previous losses, but it is still dominated by bearish correction trends in the short term. As the price trading is below EMA50, negative pressure continues, which reduces the possibility of a recent price rebound. At the same time, negative overlap signals appear in the relative strength indicators, and after the price reaches a relatively overbought level, it shows signs of a negative divergence.

Spot gold: As of 20:23 Beijing time, spot gold rose, now at 3822.04, an increase of 1.62%. Before the New York Stock Market, the (gold) price rose in the last intraday trading, exceeding $3,800 for the first time in history, supported by its continuous trading above the EMA50 and dominated by a short-term major bullish trend, and along the support trend line, despite reaching overbought levels, except for the positive signals of the relative strength indicator.

Spot silver: As of 20:23 Beijing time, spot silver rose, now at 46.726, an increase of 1.46%. Before the New York Stock Market, the (silver) price fluctuated on the last trading day, with the main bullish trend dominating on a short-term basis and trading along the trend line, and the positive pressure from trading above the EMA50 continues. On the other hand, we noticed that after reaching the overbought level, there was a negative signal on the relative strength indicator, which represents the barrier to the last rise of the price, as it needs to get rid of this overbought state while collecting its earnings.

Crude oil market: As of 20:23 Beijing time, U.S. oil fell, now at 64.270, a drop of 2.18%. Before the New York Stock Exchange, the (crude oil) price fell on the last trading day as it attempted to find higher lows as it was based on which it might help it get the bullish momentum it needed to recover, with bullish correction waves dominating on a short-term basis, as it traded above the EMA50, positive pressure continued, and in addition, the relative intensity indicator reached an oversold level, which was exaggerated xn--xm-6d1dw86k.compared to price movements, indicating a positive divergence, strengthening the opportunity for prices to recover on a near-term basis.

4. Institutional View

Deutsche Bank: The US dollar may not rebound significantly

xn--xm-6d1dw86k.commerzbank analyst Michael Pfister in a newspaperThe lawsuit pointed out that given the threat of Fed's independence and weak economic outlook, the dollar may find it difficult to achieve a meaningful recovery. He believes that despite the "unstable trade policy" the foreign exchange market does not seem to expect the dollar to perform in the second term of U.S. President Trump in his second term from his first term. The dollar appreciated sharply after it fell to the bottom during Trump's first term. "This time, this recovery may be more difficult considering the attack on the Fed and the weakening of the real economy."

Dutch International: Eurozone economy shows resilience to trade disputes

Dutch International Group economist Bert Collien wrote that the eurozone economy is running well, alleviating concerns that global trade turmoil will cause a severe blow. Data shows that the eurozone's economic prosperity index improved this month after the EU reached a trade deal with the United States. Collien said this shows that the market is "cautiously optimistic" about the future development path. He pointed out that this does not indicate a significant improvement in economic growth, but the 20 countries that make up the euro zone should be able to maintain their current growth rate in the third quarter at least. Collien said: "Given the clearer trade relations with the United States and the reasonable domestic performance, the reality is that the euro zone economy has performed well so far."

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