Huatai Securities: It is expected that there is a high probability that the Federal Reserve will continue to cut interest rates in December.

Huatai Securities pointed out that it is expected that there is a high probability that the Federal Reserve will continue to cut interest rates in December. Currently, the market's probability of a rate cut in December has decreased to around 60%. Powell also stated that there are still uncertainties regarding the rate cut, depending on the trends in future employment and inflation data. Looking at employment data, the data such as initial claims and job vacancies show a weak job market, but recent weekly employment data released by ADP indicates that the job market has stabilized since October, consistent with the continuous increase in NFIB hiring intentions. As for inflation data, the overall CPI in September was lower than expected, and inflation expectations remain stable. We believe that although there may be a decrease in downside risks in the job market in the future, job recovery is slow and inflation remains moderate, so the base case is for the Fed to continue cutting interest rates in December. If the job market continues to improve in 2026 and inflation exceeds the Fed's target level, the market's current pricing of nearly three rate cuts in 2026 may be difficult to achieve. Taking into account the possible stabilization in the job market, continued rate cuts by the Fed, and the end of balance sheet reduction, overall liquidity in the US dollar will remain loose, which will help support US asset prices.