Special topic: the Fed keeps its benchmark interest rate unchanged and slows down the pace of table contraction from June.

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This article comes from: the selection of securities firms' research reports.

By Yan Xiang and Shi Lin

Core conclusion

Events:

On May 2, the Federal Reserve announced the results of its May interest rate meeting, maintaining the federal funds rate at 5%.2029seagames.25% Mutual 52029seagames.5% unchanged, in line with market expectations.

Main points of investment:

The interest rate resolution keeps interest rates unchanged, in line with market expectations, obviously pays more attention to recent inflation, and shrinks QT for the first time since 2022H2: (1) keep interest rates unchanged: in May, it decided not to raise interest rates for the sixth consecutive meeting, in line with market expectations.2029seagames(2) official announcement slow schedule: in the text of the resolution, the biggest change lies in the bond buyers. The Federal Reserve revised the wording of the shrinking table plan for the first time since June 2022. The upper limit of the monthly shrinking table was lowered by $35 billion to $25 billion, and the upper limit of the agency MBS remained unchanged, which is equivalent to the official reduction of QT. Since Powell said in March that the reduction of QT would happen soon, the market already had some expectations for this.2029seagames(3) warning of lack of progress in inflation: on inflation, the expression "there has been a lack of further progress in achieving the committee's 2% inflation target in recent months" has been added, and the recent persistence of higher than expected inflation has obviously been highly concerned by the Federal Reserve. It is likely to become the primary target under the follow-up Fed policy framework.

Powell said in his speech that it would take longer than expected to gain confidence in interest rate cuts, but denied the possibility of further interest rate increases and attached great importance to the risk of inflation: (1) interest rates: there is not much confidence in whether interest rates will be cut this year. But at the same time stressed that it is unlikely to raise interest rates, if inflation is more persistent and the labor market remains strong, it may be appropriate to postpone the rate cut. (2) inflation: inflation has slowed significantly, but is still above the 2% target. A sustainable path to 2% inflation will take longer. The Fed is not satisfied with the 3% inflation rate and will gradually restore it to 2%. (3) Employment: the labor market is still relatively tight. The Fed will cut interest rates only if there are considerable problems in the labor market. (4) economy: the economy has made great progress in achieving dual goals, and austerity positions have put downward pressure on inflation and the economy. (5) shrinking the balance sheet: slowing the pace of shrinking the balance sheet does not mean that the balance sheet will shrink more slowly than expected, and slowing the shrinking pace is not a loose policy.

Powell's speech ruled out the possibility of further interest rate hikes, and the market once interpreted it as partial, but the short-term suppression of external liquidity may not be over: (1) on the expectations of interest rate cuts, the market expectations have been adjusted to start interest rate cuts in November, with an annual interest rate cut of 50BP. The steepest phase of the expected adjustment of interest rate cuts has passed, but the possibility that the Fed will not cut interest rates throughout the year cannot be ruled out. (2) the periodic obstruction of liquidity easing may continue to put pressure on all kinds of risky assets. Us bond interest rates may fluctuate at high levels, US stocks are still under pressure to kill valuations, and the dollar may remain strong.

Risk tips: first, the decline in US inflation is slow; second, commodity prices are rising; third, large fluctuations in overseas markets.

Report body

1 pay more attention to inflation

Reduce QT for the first time since 22H2

The interest rate resolution keeps the interest rate unchanged and in line with market expectations, and the text basically pays more attention to recent inflation than in March, and cuts QT for the first time since 2022H2: (1) interest rate resolution: in May, the federal funds rate remains unchanged at 5.25%, 5.5%, and does not raise interest rates for six consecutive meetings, which is in line with market expectations. Continue to emphasize that "the risks of achieving its employment and inflation targets are better balanced" and that "it is not appropriate to cut interest rates until confidence in inflation close to 2 per cent increases" (2) bond purchases: slowing down the contraction table for the first time since June 2022, after the March meeting sent a signal that it was in line with market expectations: the biggest change in this resolution is on the buying side. The Fed revised the wording of its shrinking plan for the first time since June 2022 to add "starting in June, the committee will slow the reduction of its bond holdings by lowering the ceiling on monthly Treasury redemptions from $60 billion to $25 billion. The committee keeps the monthly redemption ceiling for agency bonds and institutional MBS unchanged at $35 billion, and any principal exceeding this limit is used to invest in US Treasuries. "this is equivalent to the official announcement to reduce QT, while at the previous FOMC conference in March, Powell had already said that the reduction of QT would happen soon, and the market had some expectations for this. (3) economy: similar to the statement in January, it is still positive about the economy, emphasizing that the risks of achieving the employment and inflation targets have tended to be better balanced, but also mentioned that "the economic outlook is uncertain"; (4) inflation: "in recent months, there is a lack of further progress in achieving the committee's 2% inflation target." the recent persistence of higher-than-expected inflation has obviously been highly concerned by the Federal Reserve. In addition, it continues to emphasize that "the committee is highly concerned about the risk of inflation and is firmly committed to bringing inflation back to the target of 2%."

　　鲍威尔讲话表示获得降息信心的时间比预期更加漫长，但否认进一步加息的可能性，高度重视通胀风险：（1）利率：对今年是否会降息没有太大的信心，承诺在适当的时间内保持具有限制性的政策立场，下一次政策利率调整不太可能是加息。如果通胀持续性更高且劳动力市场保持强劲，那么推迟降息可能是合适的。可以保持耐心，在接近降息决策时将会谨慎小心；（2）通胀：通胀已明显放缓，但仍高于2%的目标。今年收到的通胀数据高于预期，尽管长期通胀预期保持稳定。实现2%通胀的可持续路径将需要更长时间，美联储对3%的通胀率不满意，将逐步将通胀率恢复到2%；（3）就业：劳动力市场仍然相对紧张，只有劳动力市场出现相当大的问题，美联储才会降息。美联储正努力使用工具，以保持劳动力市场和经济的强劲，同时可持续地降低通胀；（4）经济：经济在实现双重目标方面取得了长足进展，紧缩立场对通胀和经济施加了下行压力。由于移民，美国经济潜在产出出现“显著增加”；（5）缩表：减缓缩表的步伐并不意味着资产负债表收缩速度会比预期更慢，减缓缩表步伐并非政策宽松。减缓缩表步伐的决策将降低货币市场压力的可能性，将确保进程平稳过渡。

　　2降息预期回落至11月，

　　但不排除全年不降息可能性

　　鲍威尔讲话排除进一步加息可能性，市场一度解读偏鸽，但后明显回落，美股和大宗商品总体承压，美债利率边际回落。降息预期上，根据CME利率期货数据，市场预期已调整为11月开启降息，全年降息幅度50BP。资本市场上，鲍威尔讲话后，10年期美债一度下行6.6BP至4.6%以下，但截至收盘跌幅收窄至4.9BP；三大股指低开，鲍威尔讲话后跌幅大幅收窄，但随后回落。截至收盘，道琼斯、纳斯达克、标普500分别上涨0.23%、-0.33%、-0.34%；大宗商品中，黄金再度走高，COMEX黄金上涨0.9%至2330美元附近，布油下跌3.2%至83.5美元附近，LME铜下跌0.94%，再度回到10000美元以下。

　　降息预期调整最陡峭阶段已经过去，但不排除美联储全年不降息的可能性，尾部风险仍在，流动性宽松阶段性受阻对各类风险资产或继续带来压力：（1）美债：在经济或通胀明显冷却前，美债利率大概率高位震荡，但触及23Q4的5.0%概率较低；（2）美股：盈利端仍稳健，但估值已超过去10年均值水平，“杀估值”或尚未结束；（3）美元：“美强欧弱”格局延续，叠加欧央行转向大概率先于美联储，强美元格局有望延续；（4）人民币汇率：人民币汇率常态化波动或加大，强美元和中美资金利率差对人民币汇率仍构成一定压制，但国内货币政策稳汇率基调不变，贬值幅度或相对有限；（5）A股：美债利率实质性回落前，红利占优行情或将延续。

　　3 风险提示

　　一是美国通胀下行偏慢；二是大宗商品价格上涨；三是海外市场大幅波动等。