In July of this year, both the non-farm employment and the ISM manufacturing PMI data significantly undershot expectations, intensifying market concerns about a U.S. economic recession and a "hard landing." At that time, U.S. stocks experienced a substantial correction, and the U.S. dollar index also showed a noticeable decline, with the "recession trade" characteristics becoming increasingly evident. Subsequent releases of indicators such as inflation, retail sales, and PMI once again refuted the "recession trade," and U.S. stocks also rebounded and rose consecutively.

On the evening of September 3rd Beijing time, data released by the Institute for Supply Management (ISM) showed that the U.S. August ISM manufacturing PMI was 47.2, lower than the expected 47.5, but higher than the previous value of 46.8. This marks the fifth consecutive month below the 50 boom-or-bust threshold.

As the first significant U.S. economic indicator released in September, the U.S. August ISM manufacturing PMI data falling short of expectations has once again sparked market worries about a U.S. economic recession. Overnight, U.S. stocks fell across the board, with the Nasdaq index down more than 3%, the S&P 500 down more than 2%, and the Dow Jones Industrial Average down more than 1%. After the opening of the Asia-Pacific market, most indices also fell, with the Nikkei 225 down more than 3%, and the South Korean Composite Index down more than 2%. In addition to the stock market, the commodity market also declined, with Brent crude oil falling nearly 5%, and copper on the London Metal Exchange down more than 2%.

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Although the Federal Reserve has announced that the time for policy adjustments has come, sending a strong "interest rate cut" signal, the market still has doubts about whether the U.S. economy will have a "soft landing" or a "hard landing." The research perspective of CICC states that the slowdown in U.S. economic growth is an undeniable fact, a result of the current U.S. economic cycle and the tightening of financial conditions; otherwise, the Federal Reserve would not have needed to cut interest rates. However, if it is just a normal economic slowdown, not too severe, and the Federal Reserve can return monetary policy to neutrality and ease by slightly lowering interest rates to stimulate demand again, then risk assets will not face systemic pressure.

CICC stated that if it is a recession risk, it means that the decline in demand is very deep, and the Federal Reserve also needs to significantly cut interest rates to offset economic pressure. It may even be insufficient to stimulate demand by only cutting interest rates, and at this time, there will be more trading based on the downward logic of the numerator, rather than the improvement of the denominator, meaning that risk assets "should not be touched in the short term."

CITIC Securities Research pointed out that some indicators have recently shown a trend of bottoming out and rebounding, such as the actual GDP growth rate reaching 3.1% in the second quarter, an increase of 2.5 percentage points compared to the end of 2022; the growth rate of actual personal consumption expenditure and the growth rate of wholesale and retail sales volume have increased by 1.7 and 5.6 percentage points respectively compared to the previous low, further highlighting that the current concerns about a U.S. economic recession are "premature." In addition, the current de-inflation process in the United States is relatively smooth, and if the interest rate cut cycle starts in September, it is expected to promote a stable economic recovery, increasing the probability of a "soft landing."

CITIC Securities stated that considering the current trend of moderate decline in the U.S. economy, subsequent concerns about economic downturn may still affect market sentiment in a phased manner. Historically, it takes an average of 1-2 quarters for the first interest rate cut to be transmitted to the bottoming out and rebounding of major U.S. economic indicators, further supporting the resilience of the U.S. economy. However, looking back at history, there is no inevitable trend of foreign capital inflow into the Chinese market before and after the interest rate cut, and it is also necessary to analyze a variety of factors such as the current domestic fundamentals, policy aspects, and geopolitical risk changes.