Breakfast | Before the Federal Reserve's decision, the US stock market's upward trend pauses, with the S&P and Nasdaq falling from record highs

Market Overview

Before the Federal Reserve's major decision, the U.S. stock market's rally paused, with the S&P 500 and Nasdaq falling from record highs, ending Nasdaq's six-day winning streak; Tesla rose nearly 3%, marking six consecutive days of gains; Nvidia fell over 1%, marking two consecutive declines, while the chip index rose for nine consecutive days. Chinese concept stocks strengthened against the trend, with the Chinese concept index closing up nearly 2%, Nio rising over 8%, and Baidu rising nearly 8%.

After the release of U.S. retail sales, U.S. Treasury yields hit a daily high before returning to a downward trend, declining for two consecutive days.

The U.S. dollar index fell for two consecutive days, hitting a three-year low, while the euro rose 1% during the session, reaching a four-year high. The offshore yuan rose over 100 points during the session, breaking 7.11 to reach a ten-month high; Bitcoin briefly rose over $2,000, approaching the 117,000 mark.

Crude oil rose for three consecutive days to a two-week high, with U.S. oil rising over 2% during the session. Gold set an intraday historical high for two consecutive days, with spot gold first breaking $3,700 during the session.

During the Asian session, the ChiNext rose 0.7%, with the robotics concept collectively surging, the Hang Seng Tech Index rising 0.5%. Yaojie Ankang experienced a sudden crash, government bonds rebounded, and "double 焦" surged.

Key News

Xinhua News Agency Commentary: Rational dialogue is in the interests of both China and the U.S..

Chinese Ministry of Commerce: Exploring the establishment of spring and autumn breaks for primary and secondary schools, while shortening winter and summer vacation times, promoting the orderly opening of the internet, culture, and other fields.

U.S. Treasury Secretary: The Federal Reserve has been lagging in its responses, and the market is currently digesting expectations of a 75 basis point rate cut from now until the end of the year.

Milan confirmed appointment as a Federal Reserve governor, in time for this week's interest rate decision, marking the fastest "ascension" in history; a U.S. appeals court rejected Trump's request to dismiss a Federal Reserve governor, Cook was approved to attend this week's interest rate decision; "New Federal Reserve News Agency": The most unusual Federal Reserve meeting in years is coming, with predictions for the number of rate cuts this year being a highlight.

Republicans in the U.S. House of Representatives proposed a short-term spending bill to avoid a government shutdown, but ignored the Democrats' healthcare demands.

U.S. retail sales in August increased by 0.6% month-on-month, exceeding expectations for three consecutive months, with actual retail sales increasing for 11 consecutive months.

Global Times: U.S. media reports that the U.S. is demanding allies to impose significant tariffs on imports of Russian oil for China and India, while Japan refused, stating it is "difficult to do so."

Trump's "UK visit package": Hints at willingness to make trade concessions, with the British government announcing that U.S. tech companies like Microsoft and OpenAI have committed to invest over $40 billion; the UK is reportedly shelving the plan for zero tariffs on U.S. steel.

iPhone 17 demand is strong, with delivery times on the first day of pre-orders extended compared to the iPhone 16, especially in the Chinese market.

OpenAI is reportedly forming a humanoid robot algorithm team.

Meta's smart glasses were leaked early, featuring HUD displays and gesture bracelets; institutions estimate that supply chain profits far exceed those of AI glasses

Market Report

US and European Stock Markets: The S&P 500 fell 0.13% to 6606.76 points. The Dow Jones Industrial Average dropped 0.27% to 45757.90 points. The Nasdaq decreased 0.07% to 22333.959 points. The European STOXX 600 index closed down 1.14% at 550.79 points.

A-shares: The Shanghai Composite Index rose 0.04% to 3861.87 points; the Shenzhen Component Index increased 0.45% to 13063.97 points; the ChiNext Index climbed 0.68% to 3087.04 points.

Bond Market: By the end of the bond market, the yield on the US ten-year benchmark Treasury bond was about 4.03%, down about 1 basis point during the day; the two-year Treasury yield was approximately 3.50%, down about 4 basis points during the day.

Commodities: WTI October crude oil futures rose 1.93% to $64.52 per barrel. Brent November crude oil futures increased 1.53% to $68.47 per barrel. COMEX December gold futures rose 0.16% to $3725.1 per ounce.

News Details

Global Highlights

Commentary by Xinhua News Agency: Rational dialogue aligns with the interests of China and the US. The two-day China-US economic and trade talks concluded on the 15th in Madrid, Spain. Under the strategic guidance of the important consensus reached during the leaders' phone call, both teams engaged in candid, in-depth, and constructive communication, reaching a basic framework consensus on properly addressing the TikTok issue through cooperation, reducing investment barriers, and promoting relevant economic and trade cooperation.

US media: The US demands allies impose significant tariffs on China and India regarding imports of Russian oil, Japan refuses and states "it's difficult to do". According to Global Times, Japanese Finance Minister Shunichi Suzuki stated that Japan has made commitments within the framework of the World Trade Organization (WTO) and will not impose tariffs exceeding the prescribed limits as long as other member countries fulfill their WTO obligations, treating all member countries fairly. Suzuki told reporters that "raising tariffs to levels like 50% just because a certain country imports oil from Russia is difficult for us to do."

Ministry of Commerce: Exploring the establishment of spring and autumn breaks for primary and secondary schools, corresponding to a reduction in winter and summer vacation times, promoting the orderly opening of the internet, culture, and other fields. The Ministry of Commerce and nine other departments proposed several policy measures to expand service consumption, including launching a series of promotional activities for "service consumption seasons." Support high-quality consumer resources and cross-border cooperation with well-known IPs; extend the operating hours of popular cultural and museum venues and scenic spots according to local conditions, optimize reservation methods, and encourage the implementation of no-reservation policies; optimize student holiday arrangements and improve supporting policies, etc. Increase the supply of quality services to better meet the diverse service consumption needs of the people.

U.S. Treasury Secretary Becerra: The Federal Reserve has been lagging in its response, and the market is digesting expectations of a 75 basis point rate cut from now until the end of the year. Becerra stated that the Federal Reserve has been lagging in its response, and the 25 basis point rate cut has been priced in by the market, which is now digesting expectations of a 75 basis point rate cut by the end of the year, with the job market in a balanced state.

"New Federal Reserve News Agency": The most unusual Federal Reserve meeting in years is coming, the number of rate cuts predicted for this year becomes a highlight. Renowned financial journalist Nick Timiraos wrote that under an unusual political storm, a significant and controversial debate is unfolding regarding the future path of interest rates. At the Federal Reserve's September meeting, a 0.25 percentage point rate cut is expected due to slowing job growth. Investors will focus on economic forecasts to determine how many times the Federal Reserve is expected to cut rates this year. Officials are discussing how weak the job market is and how quickly rates should be lowered to neutral levels.

Directors Milan and Cook have been approved to attend and vote, the Federal Reserve's decision drama will unfold on Thursday, is a "four-way melee" emerging? The "super doves" represented by Milan, Waller, and Bowman may vote to support a 50 basis point rate cut; the centrists led by Powell may vote to support the market's expected 25 basis point cut; Cook may unexpectedly vote to support a 25 basis point rate hike to counter pressure from the White House; officials like Goolsbee and Hamrick may vote to keep rates unchanged.

• Milan confirmed as a Federal Reserve Governor, will attend the rate decision on Tuesday, the fastest in history! Generally, the entire process from Senate approval to officially taking office and sitting at the FOMC meeting table usually takes several days. This is the first time in the history of the Federal Reserve FOMC that someone will attend a rate decision meeting the day after confirmation.
• The Trump administration uncovers the Federal Reserve's "hidden third mission," long-term rate control becomes a new focus. The latest nominee for governor, Milan, unexpectedly cited the "moderate long-term rates" clause in the Federal Reserve's charter. This statement not only made the market aware of the little-known "third mission" in the Federal Reserve's charter but is also seen as a clear signal that the Trump administration is attempting to use the Federal Reserve's own regulations to provide "legitimacy" for intervening in the long-term bond market
• U.S. Appeals Court Rejects Trump's Request to Remove Federal Reserve Governor, Cook Allowed to Attend This Week's Rate Decision. The U.S. Court of Appeals for the District of Columbia Circuit rejected the Justice Department's emergency application, upholding a lower court's temporary injunction preventing Trump from replacing Cook. This means Cook will be able to attend the Federal Reserve policy meetings held on Tuesday and Wednesday.

House Republicans Propose Short-Term Spending Bill to Avoid Government Shutdown, Ignoring Democrats' Healthcare Demands. The bill would keep the U.S. federal government running until November 21 and provide a total of $88 million for the safety of lawmakers, the judiciary, and executive officials. Four Republican lawmakers have already opposed the bill, which is planned to be voted on in the House by Friday. Democrats insist on extending subsidies under the Affordable Care Act (ACA), threatening to withhold support unless this is included in the bill, while Republicans advocate passing a spending bill without healthcare provisions and leaving the issue for discussion in December.

U.S. Retail Sales Increased by 0.6% in August, Surpassing Expectations for Three Consecutive Months, Actual Retail Sales Have Grown for 11 Months. The growth momentum in retail sales in August was mainly driven by back-to-school shopping, with strong performances in online retail, clothing, and sporting goods sales. Despite economic challenges, U.S. consumer spending remains robust, supported by wage growth and the wealth effect from the stock market, which may bring new considerations for the Federal Reserve's interest rate decisions.

Trump Hints at "UK Visit Package", Willing to Make Trade Concessions, Reportedly to Sign Over $10 Billion Agreement, UK Suspends Zero Tariff Plan on U.S. Steel. Media reports indicate that during Trump's visit to the UK, a new economic agreement worth over $10 billion is expected to be announced, including technology cooperation plans involving billions in new investments, defense technology, and nuclear power cooperation agreements, as well as deepening financial center collaboration. Leaders from U.S. tech companies like NVIDIA and OpenAI are expected to attend a business roundtable at the UK Prime Minister's country residence on Thursday; the UK government has indefinitely suspended its original plan to completely eliminate tariffs on U.S. steel exports.

As Soon as Trump Arrives in the UK, He Sends "Red Envelopes", Microsoft OpenAI and Other U.S. Tech Companies Commit to Invest Over $40 Billion. The UK government announced that U.S. tech companies, including Microsoft, NVIDIA, Google, OpenAI, and CoreWeave, have committed to a total investment of £31 billion, approximately $42.3 billion, to enhance the UK's artificial intelligence (AI) infrastructure and cutting-edge technology, including data centers and computer chips

• Microsoft announced that it will invest $30 billion in the UK over the next four years to build the largest supercomputer in the UK. The investment will be used to expand Microsoft's data center footprint in the UK. At the same time, Microsoft will collaborate with UK startup Nscale to build a supercomputer equipped with over 23,000 advanced GPUs. The investment announced by Microsoft is framed within the "UK-US Technology Partnership."

iPhone 17 demand is strong, **with delivery times on the first day of pre-orders longer than iPhone 16, especially in the Chinese market. Data tracked by Goldman Sachs shows that globally, the delivery times for all iPhone 17 models are longer than those of previous generations, with the standard and Pro Max models experiencing the most significant increases, extending delivery times by 8 days respectively. In particular, the average delivery time in mainland China has reached 27 days, an increase of 17 days compared to iPhone 16. Despite reports of increased production, the extended delivery times indicate that real demand growth has outpaced production growth.

Report: OpenAI is forming a humanoid robot algorithm team. OpenAI is reportedly intensively recruiting robotics algorithm experts to form a specialized team, viewing "physical world interaction" as a key pathway to achieving Artificial General Intelligence (AGI). This strategic shift not only marks OpenAI's return to the robotics track it abandoned three years ago but also directly challenges giants like Tesla and Google, igniting competition for the next generation of humanoid robots.

• OpenAI poaches former xAI finance chief, adding another chapter to the feud between Altman and Musk.

Meta's smart glasses leaked early: featuring HUD display and gesture wristband. These glasses will be equipped with a monocular heads-up display (HUD) and a surface electromyography (sEMG) wristband. The fixed HUD display will only appear in the user's right eye's field of vision, primarily for Meta AI functions and walking navigation. When users wear the wristband, they can input letters by sliding their fingers on any physical surface, enabling text input without a physical keyboard. Meta is expected to launch its first consumer-grade smart glasses on September 18.

• Meta's AR glasses are coming, with supply chain benefits far exceeding those of AI glasses. Bank of America estimates that the bill of materials (BOM) cost for a pair of AI glasses is currently about $150, while the BOM cost for a pair of binocular AR glasses ranges from $400 to over $1,000, with high costs primarily stemming from optical waveguides and microdisplays. It is expected that by 2030, the market size for smart glasses components will soar from less than $1 billion in 2024 to over $14 billion, with core optical component suppliers likely to benefit the most

Domestic Macro

Li Qiang investigates in Gansu and Qinghai. According to CCTV News, during his investigation in Gansu and Qinghai, Li Qiang emphasized the need to promote high-quality development and high-level protection in a coordinated manner, and to build a modern industrial system that reflects local characteristics and advantages. Li Qiang stated that Gansu has a good foundation in developing heavy ion technology, space technology, and other fields. He inquired in detail about ecological protection and the use of green electricity and computing power at the ecological monitoring center. Li Qiang mentioned that Qinghai has significant responsibilities for ecological environmental protection while also having notable advantages in developing clean energy and green computing power.

Pan Gongsheng: The international monetary system may continue to evolve towards a pattern of coexistence, competition, and mutual checks among a few sovereign currencies. Pan Gongsheng pointed out that emerging technologies such as blockchain and distributed ledgers are driving the development of central bank digital currencies, reshaping traditional payment systems, and significantly shortening cross-border payment chains, while also posing challenges to global financial regulation and cooperation. There is insufficient global regulatory coordination regarding the rapidly expanding cryptocurrency market and climate risk-related regulatory frameworks, with regulatory orientations swinging significantly and being strongly driven by political factors.

Domestic Companies

China Securities Journal discusses chips: Continuous breakthroughs, domestic AI chips seize market window, and the industry chain accelerates technological iteration. The article believes that internet companies such as Alibaba and Baidu are increasing their investments in AI infrastructure, driving orders and performance growth for domestic chip manufacturers like Cambrian and Haiguang Information. The demand for AI computing power is also promoting upgrades in the optical module industry, with 1.6T modules and CPO technology becoming development priorities. Domestic AI chips are entering a critical "window period," with institutions predicting that the localization rate will jump from 17% in 2023 to 55% by 2027.

Goldman Sachs raises SMIC's H-share target price by 15%, expecting domestic demand to support output and average selling price. Goldman Sachs raised the target price for SMIC's H-shares by 15% to HKD 73.1. This optimistic expectation mainly stems from a positive outlook on China's IC design demand and artificial intelligence trends, which are expected to strongly support SMIC's output and average selling price. The firm also raised its revenue and earnings per share forecasts for the company for 2028-2029 and noted that revenue is expected to grow by 5%-7% quarter-on-quarter in the third quarter of 2025, which could become a short-term catalyst for the stock price.

Tencent: AI capabilities fully open, fully compatible with mainstream domestic chips. At the 2025 Tencent Global Digital Ecosystem Conference, Tencent announced the full opening of its technological capabilities in the field of artificial intelligence, aiming to transform AI from concept into productivity. The company released a "Tencent Cloud Intelligent Agent Strategic Panorama" covering development platforms, application scenarios, and infrastructure, while also announcing that its cloud infrastructure is fully compatible with mainstream domestic chips to provide more cost-effective AI computing power J.P. Morgan talks about "optical modules": 1.6T pluggable optical modules may exceed expectations, "CPO impact" expected after 2027. J.P. Morgan believes that the ramp-up pace of 1.6T pluggable optical modules will exceed market expectations, mainly driven by the growing bandwidth demand from AI systems and ASIC solutions. Based on this, the revenue forecast for Zhongji Xuchuang in 2026 is raised to 70.8 billion yuan, and to 88.6 billion yuan in 2027, with the target price raised to 430 yuan. Regarding market concerns about the impact of CPO technology, J.P. Morgan believes that its large-scale application will not occur until after 2027, and in the short term, pluggable optical modules will remain the mainstream technology.

YuTree Technology announces open-source UnifoLM-WMA-0—world model-action architecture for multi-type robot bodies. This architecture features two core functions: a simulation engine and strategy enhancement, with the former generating synthetic data for robot learning in a virtual training ground, and the latter predicting future robot behaviors to optimize decision-making. Tests show that the model can achieve interactive controllable generation and sustained interaction for long-range tasks.

"Lidar giant" Hesai Technology's Hong Kong stock "debut" surges. Hesai Technology successfully listed on the main board of the Hong Kong Stock Exchange, with an initial increase of up to 15%, becoming the first lidar company to be dual-listed on major exchanges in the US and Hong Kong. This IPO raised 4.16 billion Hong Kong dollars, making it the largest IPO in the global lidar industry.

Xiaomi takes 10% of the air conditioning market share? Goldman Sachs: Midea is resilient, Gree is most vulnerable. Goldman Sachs predicts that Xiaomi will increase its market share in China's air conditioning market to 10% by 2026, triggering comprehensive competition in supply chains, manufacturing, and channels. Midea Group is favored due to its manufacturing advantages and channel efficiency, expected to expand its share; Gree Electric, reliant on domestic business, high product premiums, and slow responses, has its rating downgraded to "neutral"; Xiaomi, leveraging its ecosystem advantages, is expected to become a leader in the second tier.

Keeta launches in Kuwait, firmly occupying the top of the food delivery app download charts in Saudi Arabia and Qatar, Meituan "fighting domestically, expanding overseas". Meituan is accelerating its global expansion, having recently launched the food delivery service Keeta in Kuwait, marking its entry into the third Middle Eastern market after Saudi Arabia and Qatar. Citigroup stated that Keeta has topped the food delivery app download charts in all three markets. In the face of fierce domestic competition, Meituan may further expand its overseas plans to the UAE and Brazil.

Overseas Macro

The US is reported to consider establishing a fund to support investment in critical minerals Media reports indicate that the U.S. International Development Finance Corporation (DFC) is in talks with New York investment firm Orion to establish a joint mining investment fund, with both parties proposing to provide equal amounts of funding, gradually expanding the total to approximately $5 billion. If the news is true, this would be a significant attempt by the U.S. government to directly participate in large-scale mining transactions. If the DFC commits to a full investment of $2.5 billion, this fund would become the largest project in DFC's history.

BofA September Fund Manager Survey: Investor Sentiment Rises to Seven-Month High, Most Worried About "Second Wave of Inflation". The latest BofA survey shows that investor sentiment has reached its most optimistic level since February 2025, with the net increase in fund managers' stock allocation hitting a seven-month high. Concerns about a recession triggered by tariffs have dropped from 29% in August to 12%, with only a net 16% of investors expecting the economy to weaken. 47% of respondents expect the Federal Reserve to cut interest rates four times or more in the coming year. The "second wave of inflation" remains a major concern.

Overseas Companies

SemiAnalysis Explains NVIDIA's New Chip "Rubin CPX": Completely Changing Inference Architecture, Reshaping Industry Roadmap. The SemiAnalysis report points out that the launch of Rubin CPX is second only in importance to the March 2024 GB200 NVL72 Oberon rack-level form. This chip emphasizes computing FLOPS rather than memory bandwidth by specifically optimizing the pre-fill stage. This may lead to a decline in HBM demand and a surge in GDDR7 memory demand, with Samsung being the biggest beneficiary. Additionally, NVIDIA's competitors may have to reconfigure their entire roadmap again, just as the Oberon architecture changed the entire industry's roadmap.

Top AI Models Moving Towards Differentiation: GPT to C, Claude to B. According to the Anthropic Economic Index report, 77% of Claude users' use cases are concentrated in commercial applications, with 36% specifically for programming tasks, showing clear enterprise-level characteristics. In contrast, OpenAI research shows that 73% of ChatGPT's uses are unrelated to work, taking on more of a personal assistant role.

Tesla Electric Door Lock Defect Under Regulatory Review, Entrapment Risk Becomes Focus. The National Highway Traffic Safety Administration has disclosed that it is evaluating the issue of electric doors not opening properly in the 2021 Tesla Model Y. Although the number of vehicles currently involved in the investigation is limited (approximately 174,000), the agency is assessing the scope and severity of the issue, suggesting that the investigation may expand Report: After the UAE's $2 billion investment in "Trump family's core token company," the White House allows the sale of advanced AI chips. A cryptocurrency company related to Trump received a $2 billion investment from the Emirati ruler, after which the White House approved the sale of advanced AI chips to the UAE, with one-fifth going to G42, a company personally controlled by ruler Tahnoon.

Binance is close to reaching an agreement that may allow it to escape compliance oversight imposed by the U.S. Department of Justice. Media reports indicate that Binance is nearing an agreement with the U.S. Department of Justice that may eliminate the external compliance monitoring requirements from a previous $4.3 billion settlement agreement. This three-year monitoring was originally part of Binance's guilty plea, and if ultimately canceled, it would be another sign of the Department of Justice easing external oversight on companies. The Department of Justice has not yet made a final decision but has already withdrawn several monitoring cases from other companies.

Today's News Preview

Vice Premier He Lifeng will lead a delegation to Spain for talks with the U.S. side from September 14 to 17.

Hong Kong SAR Chief Executive John Lee will release the 2025 Policy Address.

U.S. President Trump is expected to make a state visit to the UK from September 17 to 19.

The Federal Reserve will announce its interest rate decision, and Fed Chair Jerome Powell will hold a monetary policy press conference.

The Bank of Canada will announce its interest rate decision.

Eurozone August CPI.

U.S. August housing starts and building permits.

U.S. EIA crude oil inventory changes from last week.