MHMarkets：October 20, 2023--Fundamental Reminder

08:00 US President Joe Biden speaks on the Israeli-Palestinian conflict and the Russia-Ukraine conflict

09:15 CNY Loan Prime Rate 1Y(OCT/20)

14:35 BOJ Ueda Kazuo Speaks.

20:30 CAD Retail Sales MoM (AUG)

21:00 Fed Harker Speaks on the economic outlook.

The next day at 02:30 New York crude oil November futures completed the last trading on the floor, please pay attention to the trading venue expiration month notice to control the risk.

TBD Eu-us holds summit.

Market Overview

Review of Global Market Trend

Amid the escalating Israeli-Palestinian conflict, Federal Reserve Chairman Powell's speech became the market focus overnight. Mr Powell sought to preserve flexibility for the Fed, saying the FOMC was moving cautiously, that policy was not too tight for now, inflation was still too high and rising yields could mean less need to raise rates. The dollar index jumped up and down during Mr. Powell's remarks, closing down 0.27% at 106.24.

Treasury yields rose earlier in the session, with the 10-year yield flirting with the 5% mark before falling after Mr. Powell's remarks and still closing near 4.99%. The yield on the two-year note fell 6 basis points on the day to close near 5.16%. The 10-year yield has risen nearly 70 basis points in a month, while its inversion with the two-year yield has narrowed to about 26 basis points.

Spot gold continued to rally during Powell's remarks, closing up 1.35% at $1,974.07 an ounce, its highest since late July. Spot silver closed up 0.8% at $23.03 an ounce.

Crude oil fell early in the session, falling about 2% at one point after the U.S. eased sanctions on Venezuelan oil, but rebounded sharply as investors worried about escalating geopolitical conflicts following rocket attacks in Iraq, Syria, Lebanon and Yemen. WTI crude rose 1.12% to $89.13 a barrel, while Brent crude closed up 2.14%. At $93.23 a barrel.

All three major U.S. stock indexes closed in the red, falling further after Mr. Powell's remarks, which sought to preserve flexibility for the Fed, with the Dow Jones Industrial Average down 0.75%, the Nasdaq down 0.96% and the S&P 500 down 0.86%. The Nasdaq China Golden Dragon Index fell 2.1%, while Baidu dropped 6%, bringing its losses for the week to more than 13%. Netflix and Tesla ended their first days of trading up 16% and down 9%, respectively.

Major European stock indexes fell collectively, with Germany's DAX30 closing down 0.34%, Britain's FTSE 100 down 1.13% and the Euro Stoxx 50 down 0.39%.

Market Focus

1, the Palestine-Israel conflict continues to escalate, in case the commander says he will soon issue an order to launch an offensive on the Gaza Strip; Us military bases in the Middle East have been attacked in 24 hours; The United States issued a warning to Americans around the world to stay safe; The Lebanese government draws up emergency plans; Iran: If Israel continues to attack Gaza, other parties may join the war; Biden will deliver a national foreign policy address at 8am this morning; Hamas says it intends to fight Israel for a long time. British Prime Minister Sunak has arrived in Israel, calling for the avoidance of further escalation of the Israeli-Palestinian conflict. Israel said the US aircraft arrived with armoured vehicles.

2. Federal Reserve Chairman Powell took better-than-expected economic growth and rising marginal yields respectively as potential reasons for continued tightening or not. He also said that the current policy is not too tight, will be cautious action. The speech saw interest-rate futures pricing in a 1% chance of a rate rise in November. Nick Timiraos: Powell hints at a longer pause.

3. Talks on steel tariffs between the US and Europe are said to have stalled.

4. The U.S. is considering pressuring banks to limit leveraged trading by hedge funds.

5. The London Stock Exchange said it would open as normal today, after some stocks on the exchange were unable to trade normally.

6. The Energy Department is seeking to replenish 6 million barrels of oil from war reserves by January at a price of no more than $79.

7. SWIFT: The share of RMB international payment rose to 3.71% in September, another record high, and the international ranking remained the fifth in the world.

8. U.S. initial jobless claims for the week ended Oct. 14 posted 198,000, the smallest increase since the week ended Jan. 23, 2023

9. The cost of insuring Israeli debt against default hit a 10-year high of 135 basis points, according to S&P Global Market Intelligence.

10. Sources say Musk is considering pulling the X app out of Europe.

11, U.S. existing-home sales fell to the lowest level since 2010.

Institutional Perspective

01

Morgan Chase

【Morgan Chase:A rate cut would only coincide with this, and would then be “bad news.”】

Hugh Gimber, global market strategist at jpmorgan Asset Management, said Fed rate cuts next year could be bad news for U.S. stock investors. Stocks have typically rallied several times in the past two years on dovish signals from Fed officials, on hopes that borrowing costs would fall as inflation slows. However, Mr. Gimber thinks a rate cut by the Fed in 2024 could coincide with a decline in corporate earnings, which would be bad for stocks. “I think the key point for me is that the reason the Fed will cut rates next year is not because inflation has just smoothly fallen back to target,” he said. “Instead, it could be because cracks are starting to appear in the economic growth outlook, which is clearly not a positive factor for stocks, especially when you consider what that means for corporate earnings.”

02

Bank of America

【Bank of America：So confident that Treasury yields will fall over the next 12 months】

   Investors have never been more confident that Treasury yields will fall over the next 12 months, and their expectation of a pullback from 16-year highs is based on two different paths for the economy, according to Bank of America's latest fund-manager survey released this week.

The bank's survey found that roughly two-thirds of investors expect a “soft landing” or “no landing,” in which the Fed is able to bring inflation back to its 2% target without tipping the economy into recession. The outcome also means the Fed will likely continue to delay or not raise interest rates at all, which would drag down Treasury yields.

03

WELLS FARGO

【WELLS FARGO：Treasury yields are expected to fall across the board in 2024】

“We expect the U.S. to enter a mild recession in mid-2024, and we think the combination of such a recession and slowing inflation would push the FOMC to cut rates more quickly than markets currently anticipate,” Wells Fargo's team of economists previously wrote. As a result, we expect Treasury yields to decline across the board in 2024.