Latest Release from the Federal Reserve

In the early hours of September 4 Beijing time, the Federal Reserve officially released the latest edition of the "Beige Book," which showed price increases across all regions. Ten districts reported "moderate or slight" inflation, while the other two experienced "strong input price growth."

The "Beige Book" published by the Federal Reserve summarizes the findings of 12 regional Federal Reserve banks on the national economic situation. This report serves as a critical reference for the Federal Reserve's monetary policy meetings. Federal Reserve officials will hold their next interest rate meeting from September 16 to 17.

According to statistics from the financial blog Zerohedge, mentions of inflation in this "Beige Book" reached a near four-year low. Meanwhile, mentions of "slowdown" decreased from a two-year high of 56 in July to 34. This indicates that, based on feedback from Federal Reserve respondents, neither inflation nor an economic slowdown is currently a major risk factor of concern.

Regarding the labor market, the "Beige Book" showed that 11 districts described overall employment levels with almost no net change, while one district reported a slight decline. Half of the regions also reported a reduction in the number of immigrant workers, particularly in the construction industries of New York, Richmond, St. Louis, and San Francisco.

Additionally, according to the latest report from the U.S. Bureau of Labor Statistics, U.S. JOLTS job openings in July stood at 7.181 million, dropping to the lowest level in 10 months. This suggests that against a backdrop of increasing policy uncertainty, U.S. businesses' demand for labor is gradually weakening.

As a result, market expectations for a Federal Reserve rate cut continue to rise. As of 06:30 Beijing time on September 4, according to CME "FedWatch," the probability of the Federal Reserve maintaining unchanged interest rates in September is 3.4%, while the probability of a 25-basis-point rate cut is 96.6%. The probability of unchanged rates in October is 1.6%, with a cumulative 25-basis-point cut at 46.8% and a cumulative 50-basis-point cut at 51.6%.

Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, noted that the Federal Reserve has already opened the door for rate cuts, but the extent will depend on whether labor market weakness poses a greater risk than rising inflation. Market focus will continue to be on the job market.