The two-day FOMC meeting has ended, and Powell officially announced at a press conference that the Federal Reserve will reduce its bond purchases at a rate of $15 billion per month. However, interest rate hikes have not yet been considered, and the benchmark interest rate remains unchanged at 0% -0.25%. Some analysts believe that at this rate, the reduction plan may come to a complete end by June 2022.

Powell stated that the US economy and labor market have made substantial progress, so the pace of reducing bond purchases is faster than expected six months ago. But he emphasized that high inflation is "temporary", and the goal of this meeting is only to reduce the details of bond purchases, and it is not yet the right time to raise interest rates.

However, he also mentioned that the timing of interest rate hikes depends on economic conditions. If the job market maintains the same recovery pace as last year, it is likely to reach full employment in the second half of next year, and the Federal Reserve will resolutely take interest rate hikes at that time.

After the news was announced, the yield of the US 10-year treasury bond bond rose by 5 basis points to 1.6%, the gold price fell by about 1%, and the three major stock indexes of US stocks saw gains.

As of the close, the Dow Jones Industrial Average was at 36157.58 points, up 104.95 points, or 0.29%, while the S&P 500 Index was at 4660.57 points, up 29.92 points, or 0.65%, both of which were new highs in five consecutive trading days. The Nasdaq 100 index closed at 15811.58 points, up 161.98 points, or 1.04%.

ADP "small non agricultural" exceeds market expectations

Yesterday, the United States also released ADP "small non farm" employment data of 571000 people, higher than the expected 400000. The report shows that in October, the number of employment in trade, transportation, and public utilities increased by 78000, the construction industry increased by 54000, and the manufacturing industry increased by 53000.

ADP Chief Analyst Nela Richardson pointed out that the job market has shown new momentum, with an average of 385000 new jobs added significantly compared to the third quarter, and a total of nearly 5 million new jobs added this year.

Moody's Chief Economist Jenny said that as the Delta variant virus weakens and the job market is recovering, as long as the epidemic continues to be under control, there may be more job growth in the coming months.

However, some analysts have pointed out that the current problem of labor shortage in the United States is becoming increasingly severe and is expected to continue until 2022. US Treasury Secretary Yellen earlier stated that the US labor force participation rate has decreased, but it is uncertain whether this is "temporary".

Follow Friday's non farm report

Powell said yesterday that if the US labor market maintains a strong recovery, it may trigger conditions for the Federal Reserve to raise interest rates. After the ADP data showed significant strength, the non farm report released this Friday became particularly important.

Economists predict that there will be a new 450000 non farm workers in October, compared to only 194000 in September, less than half of the expected increase.

Goldman Sachs believes that inflation may remain high, so it has raised expectations for the Federal Reserve's rate hike by one year to July 2022, with the second rate hike scheduled for November 2022, followed by two annual rate hikes.

Goldman Sachs Chief Economist Jan Hatzius predicts that when the contraction ends, personal consumption expenditure inflation will remain above 3% and core CPI inflation will remain above 4%, thus adjusting the forecast for interest rate hikes.

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