On December 4th, China International Capital Corporation (CICC) reported that last week, US asset prices surged across the board, and an important catalyst was the Federal Reserve Governor Waller's discussion of the conditions for interest rate cuts, which triggered market pricing for early rate cuts. From a situational analysis perspective, Waller's speech is reasonable, that is, if inflation can significantly slow down, according to the Taylor rule of monetary policy, real interest rates do not need to be so high. But the key question is whether inflation can significantly slow down? We believe there is uncertainty. The slowdown in inflation in the United States over the past year has mainly come from supply recovery, such as supply chain repair, increased labor force participation, and a decrease in energy prices. It is not yet clear how much room these factors have for repair, and whether their impact on reducing subsequent inflation can be as significant as in the past year. If the marginal strength of supply repair weakens, given the same demand, inflation resilience will be stronger, and interest rates will stay at high levels for a longer time. Overall, we believe that the Federal Reserve may not necessarily cut interest rates early, and market pricing may be too advanced. However, Waller's speech conveys a signal that the Federal Reserve has no intention of excessively suppressing the economy and hopes to guide a soft landing, which is conducive to boosting short-term risk appetite.