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Cathay Securities September Outlook: Fed Policy Flexibility Supports Equities and Bonds
Finance · Investment Banks/Brokers · cnyes · 2026-09-08
Cathay Securities suggests that cooling U.S. inflation and labor data provide the Fed with room to hold rates, favoring AI infrastructure and global stocks.
What Happened
Monetary Policy: Cathay Securities notes that while U.S. Treasury yields have been pressured by oil prices and fiscal deficits, cooling inflation and a softening labor market provide the Federal Reserve with room to maintain current interest rates. Despite market volatility, there is no significant evidence of foreign capital flight.
AI Investment Trends: The firm highlights AI infrastructure capacity as a key market focus, with AI investment as a percentage of U.S. GDP continuing to rise. Leading indicators, such as semiconductor equipment imports and memory procurement in Taiwan and South Korea, suggest that this growth cycle remains robust.
Resource Allocation: Investors are advised to monitor developments in power, construction, and financing, as these sectors are critical to supporting ongoing AI capital expenditures. Cathay Securities maintains a positive outlook on U.S., Chinese, Hong Kong, and Japanese equities, as well as gold and bonds.
Market Risks: While corporate fundamentals remain supportive, consumer momentum appears to be nearing a short-term peak. Coupled with geopolitical uncertainties, the firm advises a cautious approach to chasing market rallies while monitoring potential resource constraints caused by heavy AI spending.