On the eve of the FOMC meeting, the market made a final adjustment, some companies issued new bonds at the last minute, and the market finally had some (belated) concerns about the higher dot plot and the "hawkish pause in rate hikes", and US fixed income yields rose by about 5-6 basis points.

The inflation data released by Canada yesterday was less friendly, with the core CPI rising sharply in August, the fastest growth rate since July 2022. At the same time, US used car prices unexpectedly rose by 1.5% month-on-month. With WTI crude oil prices still above $90 and with little sign of easing, we believe that the risk of a rebound in inflation before the end of the year remains, that is, the almost forgotten view that "interest rates will rise higher and last longer" has a chance to make a comeback.

In addition, although non-farm payrolls showed early signs of a slowdown in the tight job market, micro data has recently begun to diverge as large technology companies have resumed hiring. Salesforce recently said it would hire 3,300 employees in sales and engineering, and Amazon also announced that they will hire 250,000 employees this holiday season, an increase of 67% from 2022, and wages have also risen sharply to $20.5 per hour. Even Meta seems to have made a comeback. According to Bloomberg, the company has restored benefits and provided "return recruitment" for previously unemployed employees, once again showing the surprising resilience of the US technology industry.

The divergence in monetary policy outlooks has led to a sharp rise in the dollar over the past two months, and the dollar is now facing strong technical resistance to a short-term reversal. During this trend, the yen and the yuan have been relatively underperforming against the dollar, and central bank officials have resorted to verbal intervention as a short-term strategy to prevent a one-way trend.

*KANDA: Pay close attention to foreign exchange situation

*JAPAN’S KANDA: Maintaining close contact with the U.S. Treasury Department

*KANDA: The United States and Japan share the same view on excessive changes

In terms of cryptocurrencies, prices rebounded slightly, with BTC breaking through $27,000 and ETH rising to around $1,650 again. There is still little news affecting the market, but we noticed that the correlation between BTC and SPX and gold spot prices has quietly rebounded to this year's high. Therefore, we expect cryptocurrencies to move in sync with stocks and bonds at today's FOMC meeting. If the Fed shows an unexpected hawkish tendency, it will be a negative result for the market and may cause prices to fluctuate lower again. I wish you all a smooth trading today!