News Quick Take from April 13th to April 15th

The Federal Reserve will release the minutes of its September monetary policy meeting at 2 a.m. on Thursday. According to analyses by foreign media, the minutes are expected to show a wider divergence among officials regarding the future path of interest rates, which could influence the Fed's next policy moves. While the market currently widely anticipates that the Fed will keep rates unchanged in October, the September meeting minutes could reveal the extent of disagreements among Fed officials: some believe that inflation remains strong and persistent, requiring continued policy tightening—for example, Dallas Fed President Logan thinks that at least two more 25-basis-point hikes are needed to control inflation; on the other hand, some officials prefer to remain patient and wait for new data to justify further hikes, such as New York Fed President Williams, who believes there is "no need to rush" when deciding on another rate hike, a view echoed by Fed Vice Chair Jefferson.

Spot silver has dropped by 2.03% intraday to $60.08 per ounce; the main COMEX silver futures contract is now at $60.38 per ounce, down 1.97% intraday.

Savita Subramanian, Head of US Equity and Quantitative Strategy at Bank of America, stated that for the first time in decades, bonds have truly become a competitive alternative asset to the stock market. She also warned that investor sentiment is currently high, which means the stock market is more vulnerable to negative surprises and has relatively limited room for further upside surprises. Subramanian noted that the yield on the US 10-year Treasury bond has already surpassed 5%, while Bank of America's own valuation models indicate that the annualized return of the S&P 500 index over the next ten years may not reach this level. She pointed out that US policymakers are working to prevent long-term rates from rising too much. Both the Federal Reserve and the US Treasury Secretary are closely monitoring changes at the long end of the yield curve. Meanwhile, demographic shifts also mean that the ceiling for US interest rates may be lower than in the 1970s and 1980s. In addition, artificial intelligence may bring some deflationary effects in the future, which could ease long-term inflation and interest rate pressures. In this context, Subramanian believes that the environment for bond allocation is becoming more favorable, as it may be difficult for US Treasury yields to consistently rise above 6% to 7%.

European Central Bank Governing Council member Dolenc stated that the ECB’s current monetary policy stance enables policymakers to respond to a variety of potential future shocks. Dolenc said on Wednesday that the current interest rate levels provide sufficient flexibility to deal with changing future circumstances. He added that the ECB’s future policy actions will still depend on inflation expectations and the development of related risks. In a speech in Ljubljana, Dolenc emphasized that geopolitical strategic risks and high energy prices remain significant sources of uncertainty, resulting in persistent inflationary pressures.