Cathay Pacific Haitong: Geography remains a key pricing anchor for current assets

The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that the Fed's interest rate hike will not effectively support the market. The recent market rebound is mainly due to the release of favorable geographical information. Currently, Trump is facing multiple pressures such as midterm elections, heavy tariff damage, high inflation, and a “crisis” of US debt, and the geopolitical situation has become his key bargaining chip. The US-Iran peace talks are facing a new round of opportunities. Recently, we have been closely monitoring the trend of the geographical situation.

Cathay Pacific Haitong's main views are as follows:

The bank believes that the recent market rebound was not supported by the Federal Reserve's interest rate hike, but rather from the release of short-term geographical easing signals. The bank has already analyzed in a previous report that it is difficult for the Federal Reserve to effectively support asset prices, and the impact of not raising interest rates will be even greater, because it will raise questions about the credibility of the Federal Reserve and the independence of Walsh, and interest rate hikes will also lead to short-term liquidity tightening. Therefore, the bank believes that the rebound in asset prices after the interest rate hike is implemented cannot be explained by the Federal Reserve's interest rate hike. The recent easing of US and Iran and the release of related news has contributed to the fact that the Fed's interest rate hike did not boost asset prices (all three major US stock indexes fell after the Fed's interest rate meeting on September 16, EST), which is beneficial to liquidity and the market.

Currently, Trump is facing multiple pressures such as midterm elections, heavy tariff damage, high inflation, and a “crisis” of US debt, and the geopolitical situation has become his key bargaining chip. According to bets on Polymarket, as of September 20, 2026, traders generally expect the Democratic Party to take back control of the House of Representatives, while there is fierce competition for ownership of the Senate, and the probability has recently been skewed towards the Democratic Party. The stickiness, persistence, and breadth of US inflation exceeded expectations. With interest rates on US bonds soaring and fiscal pressure, US fiscal and monetary coordination is even more difficult. The geography of the US and Iran has become a key variable, and the market logic clearly points: easing between the US and Iran → falling oil prices → cooling inflation expectations → loosening expectations of the Federal Reserve's interest rate hike → falling US bond yields. Therefore, the bank believes that the current US ruling party has stronger incentives to mitigate the geographical risks between the US and Iran, and that the US-Iran issue has become the core pricing anchor for recent asset prices.

The current peace talks between the US and Iran are facing multiple opportunities, and we are closely monitoring the next direction of the geographical situation. On the one hand, Iran has now proposed cease-fire conditions to the US to provide a precondition and foundation for a new round of US-Iran peace talks. Meanwhile, US President Trump is expected to meet with the leaders or foreign ministers of GCC member states while attending the UN General Assembly in New York on September 22 to discuss the next steps in the Iran war. This meeting will focus on America's strategic vision after the war against Iran ends. Currently, with Trump facing multiple internal and external pressures, the US and Iran may ease up or usher in a new opportunity. If the US and Iran ease and oil prices decline relatively, US inflation expectations will decline, interest rates on US bonds fall, and liquidity-driven assets such as US stocks and gold will be favorable, and global liquidity will all improve; if the US and Iran continue, the market may remain volatile.

Global asset price performance last week: crude oil fell, gold rose, and the rise and fall of the global stock market was divided. Last week (2026.9.11-2026.9.18), on the market side, the Brent crude oil continuous futures settlement price was 103.87 US dollars/barrel, down 0.71% from the previous week; COMEX gold continuous futures closed at 4385.90 US dollars/ounce, up 0.17%; the US dollar index reported 100.22, up 1.14%; and the US 10-year Treasury yield was 5.01%, up 5BP from the previous week. In terms of the global stock market, the three major indices performed well: Taiwan Weighted Index 2.16%, Hang Seng Technology Index 1.97%, and Tokyo Nikkei 225 Index 1.57%. The three underperforming indices are: the US Dow Jones Industrial Average -1.69%, the Paris CAC40 Index -1.40%, and the Sao Paulo IBOVESPA Index -1.06%.

Economy: US employment and inflation have exceeded expectations, and the Federal Reserve may continue to raise interest rates. In August 2026, 162,000 new non-farm payrolls were added in the US, far exceeding market expectations (55,000), and the unemployment rate remained stable at 4.1%. The core CPI growth rate rebounded 0.1 percentage points to 0.3% month-on-month, exceeding the market's psychological threshold for tolerating the Fed's interest rate hike (0.2%). On September 16, the Federal Reserve raised interest rates by 25 BP. According to the bitmap, there may still be one rate hike during the year.

Risk warning: There is still great uncertainty about the direction of the US-Iran conflict; the Fed's interest rate hike exceeding expectations may cause market shocks.