Analysis

Federal Reserve Chair Kevin Warsh delivered a speech at the Fed's annual symposium in Jackson Hole, Wyoming. He stated that the overall performance of the US economy has been impressive, even showing signs of strengthening recently. Corporate capital expenditure, S&P 500 earnings, consumer spending, and the labor market have all remained resilient, but inflation remains well above the Fed's 2% target.

TradingKey - US core inflation in July met market expectations, but headline PCE growth was slightly higher than forecast. Coupled with a stagnation in real consumer spending, this leaves the Federal Reserve facing greater uncertainty over its future policy options.

TradingKey - The U.S. will release its July Personal Consumption Expenditures (PCE) price index on Wednesday, August 26 (ET). As a key inflation indicator closely watched by the Federal Reserve, this data will serve as a crucial basis for the market to gauge whether a rate hike will occur in September.

The Federal Reserve released the minutes of its July meeting on August 19, Eastern Time. At the meeting held on July 28–29, the FOMC decided to maintain the target range for the federal funds rate at 3.50%–3.75%. The minutes noted that some Fed officials believed monetary policy might need to be tightened if inflation fails to decline. Some participants noted that the current monetary policy rate was not sufficiently restrictive to bring inflation down to 2%.

Chicago Fed President Austan Goolsbee said he is encouraged by the recent cooling in inflation, but noted that similar improvements must continue over the coming months to confirm that inflation is moving back toward the Federal Reserve's 2% target.

TradingKey - The latest U.S. retail sales data for July came in significantly weaker than market expectations. U.S. retail sales fell 0.6% month-on-month in July, compared to a 0.2% increase in June, whereas the market had previously expected modest growth to continue. The data indicates that after robust consumer spending in the second quarter, U.S. consumers turned noticeably more cautious at the start of the third quarter.

TradingKey - Data released by the U.S. Bureau of Labor Statistics on Thursday showed that the U.S. Producer Price Index (PPI) was flat month-on-month in July, coming in below market expectations of a 0.2% gain. Year-on-year, it rose 4.7%, marking a notable slowdown from 5.5% in June and below market forecasts of 4.9%, indicating that producer-side inflationary pressures in the U.S. are cooling.

TradingKey - Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the U.S. Consumer Price Index (CPI) rose 0.1% month-over-month in July, rebounding significantly from a 0.4% decline in June, and increased 3.4% year-over-year, down from 3.5% in June. Both figures were largely in line with market expectations, indicating that U.S. inflation continues to cool slowly, though the overall level remains well above the Federal Reserve's 2% long-term target.

TradingKey - The U.S. Bureau of Labor Statistics will release the July Consumer Price Index (CPI) at 8:30 ET on August 12. Following an unexpected decrease of 23,000 in July non-farm payrolls and the market's significant downward revision of Federal Reserve rate hike expectations for September, this CPI reading will be key data in determining the Fed's next policy direction.

According to media reports citing sources, the Trump administration has further escalated its personnel pressure on the Federal Reserve, officially initiating removal proceedings against Governor Lisa Cook. Citing unproven mortgage fraud allegations, the White House issued a notice to Cook requiring her to respond to the charges within three weeks.

TradingKey - Latest data from the U.S. Department of Labor shows that U.S. non-farm payrolls decreased by 23,000 in July, ending a previous streak of consecutive growth and signaling a significant cooling in the labor market. Meanwhile, the unemployment rate fell to 4.1% in July from 4.2% in June, though the decline was primarily driven by changes in labor participation and does not fully reflect an improvement in employment demand.

According to the Financial Times, individuals close to new Federal Reserve Chair Kevin Warsh stated that Warsh has admitted to those around him that there were indeed missteps during his first ten weeks at the helm of the world’s most important central bank. He acknowledged failing to effectively reinforce the core message of maintaining price stability and allowing confusion to arise regarding whether his long-term Fed reform plans would influence short-term decision-making.

TradingKey - The U.S. Bureau of Labor Statistics will release the July non-farm payrolls report at 8:30 AM ET on August 7. Current market focus is centered not only on employment growth but also on the unemployment rate, average hourly earnings, and whether data from the previous two months will be revised downward again. These indicators will directly impact Federal Reserve rate hike expectations for September, as well as the trajectory of U.S. stocks, the U.S. Dollar, and gold (XAUUSD).

TradingKey - Data released by the U.S. Department of Commerce on Thursday showed that the U.S. Personal Consumption Expenditures (PCE) Price Index rose 3.7% year-on-year in June, down from 4.1% in May. On a month-on-month basis, the index declined 0.1%, marking the first monthly drop since April 2020 and indicating that a retreat in energy prices has driven a significant cooling in overall inflation.

TradingKey - The Federal Reserve did not raise interest rates at its July meeting, but Chairman Kevin Warsh's statements at the press conference sparked greater controversy than the rate decision itself.

On July 29, Eastern Time, the Federal Reserve announced the results of its July interest rate decision. The Federal Open Market Committee (FOMC) voted 9-3 to maintain the target range for the federal funds rate at 3.5%–3.75%, in line with mainstream market expectations. Notably, this meeting saw a rare three dissenting votes against maintaining the current interest rate, marking the first time since 2016 that the Fed has recorded three dissents in the same direction within a single policy decision.

TradingKey - The Federal Reserve is scheduled to announce its July interest rate decision on July 29, ET. While the federal funds rate target range is currently maintained at 3.5%-3.75%, the level of uncertainty surrounding this meeting is at a high rarely seen since September 2024. Interest rate swap market data indicates a roughly 40% probability of a 25-basis-point rate hike, and the CME FedWatch Tool shows a probability of approximately 36%, up significantly from only about 10% two weeks ago.

TradingKey - The Federal Reserve will hold its monetary policy meeting on July 28-29 Eastern Time and announce its interest rate decision at 14:00 on July 29, with Chairman Kevin Warsh holding a press conference thirty minutes later. The current target range for the federal funds rate is 3.50% to 3.75%. As this meeting will not include the release of new economic projections or the interest rate dot plot, market attention will be focused on the policy statement, the voting results, and Warsh’s comments on inflation and the policy path for September.

TradingKey - Chinese AI developer Moonshot AI recently officially released its latest large language model, Kimi K3. An increasing number of analysts believe that the enhanced performance and reduced usage costs of the Kimi K3 model could lower the barrier to AI applications, leading to more users, higher frequency of calls, and larger-scale inference demand. The "Jevons Paradox" in economics may be playing out once again in the AI industry.

TradingKey - Where exactly will artificial intelligence take the world? In the latest interview with The Economist, Elon Musk once again shared a highly controversial prediction. Within the next five years, AI's overall intelligence levels are expected to surpass those of humans, and in another decade, humans may no longer even be the most dominant intelligent species on Earth.