[ What to say 👀 at the first FOMC meeting in 2024 ]

At the 2024/1 Fed Intrerest Rate decision-making meeting, the policy Intrerest Rate remained unchanged as expected, in the range of 5.25 ~ 5.5%. This conference conveys two main points:
📍 Timing of interest rate cuts is expected to be managed
📍 A signal that the speed of shrinkage is about to be adjusted
1) Timing of the first rate cut: There will be no rate cut in March, and expectations management will be carried out
When the draft statement removes any appropriate tightening language and changes it to Intrerest Rate consider "any adjustments", a two-way risk assessment will be conducted, revealing that there is an opportunity for a precautionary rate cut as long as the slowdown in inflation continues, or if the job market unexpectedly weakens
Note:
The more hawkish expectation management of the Fed directly conveyed the signal that the March interest rate cut was not the basic scenario of the Fed members, and emphasized that the members need to be confident that inflation will continue to move towards the 2% target before they start to consider interest rate cuts (judging that the main purpose of the hawkish speech is to manage the market's interest rate cut expectations)
2) Balance sheet reduction speed discussion: There will be an in-depth discussion at the March meeting
The monthly balance sheet reduction of 95 billion yuan has not been adjusted in any way, but from the Q&A at Powell's post-meeting press conference, he positively acknowledged that the committee members had discussed the balance sheet situation, and said that it was time to start discussing the balance sheet and the speed of the balance sheet reduction (sic: we're getting to that time where questions are beginning to come into greater focus about the pace of runoff and all that.）
At the same time, Powell responded to reporters' questions, saying that he does not believe that slowing down the pace of balance sheet reduction will require seeing the ON RRP go to zero, and the details will be discussed in depth at the March meeting
Under the overall easing trend, stocks and bonds are still in the best situation of synchronous allocation in the first half of the year
It is also necessary to pay attention to this Friday's non-farm data, as long as there is a moderate slowdown as the small non-farm ADP monthly increase of 107,000 (the first 158,000), the fundamentals and capital will have a supporting effect on the stock market that has rebounded
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