Institution: The combination of Fed rate cuts and balance sheet reduction may boost market risk appetite

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On October 28, the Fed's policy committee may take two major dovish measures on Wednesday: implement a 25 basis point rate cut and release signals for further easing, while also announcing the end of the balance sheet reduction plan (this move may put downward pressure on Treasury yields). LHMeyer analyst Derek Tang pointed out, “The dual action of rate cuts (combined with subsequent easing expectations) and an early halt to the balance sheet reduction will provide significant support for market risk appetite.” He added that although there is still uncertainty about whether to terminate the balance sheet reduction this week, the recent tightening in the financing market has significantly increased the likelihood of this decision. ( Jin10 )

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