MHMarkets：October 26, 2023--Fundamental Reminder

20:15 EUR ECB Interest Rate Decision

Market expects the ECB to pause on rate hikes

20:45 ECB President Christine Lagarde holds a news conference on monetary policy.

20:30 USD Initial Jobless Claims (OCT/21)

Markets are expecting it to register 208,000.

20:30 USD GDP Growth Rate QoQ Flash (Q3)

The markets expect it to grow 4.3%, double the previous figure of 2.1%.

20:30 USD Real Consumer Spending QoQ Flash (Q3)& USD Core PCE Prices QoQ Flash (Q3)

Markets are expecting the latter one to register 2.5%.

MHMarkets Market Overview

Review of Global Market Trend

On Wednesday, the dollar index fluctuated to the upside above 106 before closing up 0.27% at 106.57. Treasury yields rebounded, with the 10-year yield back above 4.9% and at last close at 4.961%. The yield on the two-year Treasury note fell and then rose to close at 5.125%.

Spot gold fluctuated to the upside, but on foreign media reports that Israel would delay its ground offensive, gold fell to a day low of $1,963.25 in the U.S. market in the short term, but then rebounded and regained above $1,970, finally closing up 0.44% at $1,979.66 / ounce. Spot silver settled down 0.23% at $22.86 an ounce.

Crude oil rose sharply in U.S. trading, with WTI crude falling to an intraday low of $82.91 in response to the Israeli news before recovering all its losses and turning positive to end up 1.95% at $85.26 a barrel, while Brent crude rose 2.23% to $89.05.

The three major U.S. stock indexes closed in the red, with the Dow Jones Industrial Average down 0.32%, the Nasdaq down 2.43%, its biggest one-day drop since February, and the S&P 500 down 1.43%. Nvidia closed down more than 4%, Google fell 9.5% and Microsoft rose 3%. The Nasdaq China Golden Dragon Index closed down 2.1%, with Xpeng dropping more than 8% and Alibaba closing down 2%.

Major European stock indexes were mixed, with Germany's DAX30 closing up 0.08%, the U.K. 's FTSE 100 up 0.33% and the Euro Stoxx 50 up 0.2%.

Market Focus

1. In a conflict that has killed more than 8,000 people on both sides, the Wall Street Journal reports that Israel has agreed to delay its ground assault on Gaza so that the US can add air defence systems in the Middle East. The prime minister said preparations for a ground attack were under way and the timing would be agreed with his cabinet.

2, the temporary border between Lebanon and Israel, Biden said he will stick to the “two-state solution” to solve the Palestine-Israel conflict.

3, Turkish President Recep Tayyip Erdogan made his strongest comments to date on the conflict between Israel and Hamas, claiming that Hamas is not a terrorist organization but a “liberator” fighting to protect Palestinian land and people. Turkey's stock index closed down 7.1% Wednesday, its biggest drop since February, after a circuit breaker was triggered twice during the day.

4. Republican Congressman Mike Johnson was elected speaker of the House of Representatives, refocusing Capitol Hill on government spending.

5. Biden asked Congress for nearly $56 billion in domestic spending. U.S. Senate Majority Leader Chuck Schumer says he's moving forward with three bipartisan spending bills.

6. According to US media, the UAW is close to reaching a labor agreement with Ford Motor, with a wage increase of 30%.

7, the Bank of Canada kept its benchmark interest rate unchanged at 5.00%, but will retain the bias to raise rates further due to slow progress on the core inflation front.

8. Us EIA crude oil stocks change rose by 1.371 million barrels in the week to October 20th, more than expected by 239,000 barrels and compared with a 4.491 million drop previously.

9. Russia holds a strategic deterrent force drill. According to market news, the upper house of the Russian Parliament favored withdrawing Russia's ratification of the Nuclear Test Ban Treaty.

10. British media reported that hedge fund mogul Ackman made a profit of $200 million by betting against US bonds.

Institutional Perspective

01

TD Securities

【TD Securities，“The Fed has no choice but to keep hammering home the message that rates will stay high for an extended period of time until they make enough progress on inflation.”】

The market for new homes has generally held up despite the highest mortgage rates in decades and rising home prices. While those factors may keep more potential buyers on the sidelines, a lack of listings in the resale market has so far supported demand for new homes.

02

Citibank

【Citibank：The BOC will hold off on raising interest rates but will not rule out a further increase in December】

October's BOC policy decision remains uncertain, but this week's weaker September CPI reading shifted the balance of risk from a hike to another pause, according to Citibank. The retreat in core inflation from August's high could raise enough questions about whether policy rates necessarily need to be raised.

However, with interest rates unchanged at 5.0%, the guidance that rates could still rise further should be kept unchanged or even possibly updated to reflect that the probability of another increase has risen. A December rate hike can't be ruled out, especially with one more CPI reading due before that.

03

RBC

【RBC：Us GDP is expected to grow by 5%】

GDP grew at an annualized rate of 5% in the third quarter from the previous quarter, driven by consumer spending,  increases in net trade and inventories.