MHMarkets：November 08, 2023--Fundamental Reminder

15:00  EUR Germany Inflation Rate MoM Final (OCT)

17:30  BOE Governor Bailey speaks.

18:00  EUR Retail Sales MoM (SEP)

22:15  Fed Chairman Powell speaks.

23:00  USD Wholesale Inventories MoM  (SEP)

The next day at 02:40 Fed Williams speaks.

MHMarkets Market Overview

Review of Global Market Trend

The dollar index continued its rebound from last week's sharp selloff on Tuesday, eventually closing up 0.209% at 105.52. U.S. Treasury yields resumed their decline, led by long-term yields. The yield on the 10-year Treasury note closed at 4.571%; The yield on the two-year Treasury note, which is more sensitive to the Fed's policy rate, closed at 4.915%.

Spot gold fell for a second straight session, settling down 0.43% at $1,969.26 an ounce, its lowest in nearly three weeks. Spot silver settled down 1.73% at $22.63 an ounce.

International oil prices tumbled, with both hitting their lowest levels since July 24, as weak global economic data overshadowed concerns that the Israel-Hamas war could erupt into a wider regional conflict. WTI crude closed down 4.69% at $77.08 per barrel; Brent crude settled down 4.40% at $81.40 a barrel.

The three major U.S. stock indexes rose for seven consecutive sessions, with the Dow Jones Industrial Average up 0.17%, the Nasdaq up 0.9% and the S&P 500 up 0.25%. The Nasdaq China Golden Dragon Index closed down 0.7%.

Major European stock indexes broadly fell. Europe's Stoxx 50 index closed down 0.13%, Germany's DAX30 up 0.11%, Britain's FTSE 100 down 0.1%, France's CAC40 down 0.39%, Spain's IBEX35 down 0.06% and Italy's FTSE MIB down 0.69%.

Market Focus

1. Minneapolis Fed President Kashkari: The Fed will do more on interest rates if needed. The FOMC has not discussed cutting rates. Chicago Fed President Goolsbee: If long-term Treasury yields stay elevated, that would probably amount to tightening policy, and the first priority for changing the stance on rates is the progress of inflation; Fed Governor Bowman: Still expect further rate increases to be needed. Dallas Fed President Logan: Inflation is still too high. The numbers look like they're headed for 3%, not 2%. Fed Governor Waller: The economy was booming in Q3, and the Fed is watching that closely. The jump in 10-year yields was an earthquake.

2. The Atlanta Fed's GDPNow model sees fourth-quarter GDP growth at 2.1%, compared with 1.2% previously.

3. Opec Secretary General Algaz: Despite the challenges, the [global] economy is still doing well and demand is still quite strong. Opec + will take appropriate measures at its next meeting.

4. EIA Short-term Energy Outlook Report: lowered 2023 global crude oil demand growth forecast by 0.3 million barrels/d to 1.46 million barrels/d (previously 1.76 million barrels/d); Raised its 2024 global crude demand growth forecast by 80,000 BPD to 1.4 million BPD (previously 1.32 million BPD).

5, traders fully priced in three quarter-point BOE rate cuts next year.

6. The RBA raised the cash rate by 25 basis points to 4.35%, the first hike since June.

7. Us semi-annual Exchange rate Report: No currency manipulator was designated, Vietnam was re-added to the test list, and Switzerland and South Korea were removed.

8. Mr. Zelensky will remain president after his term expires because of laws prohibiting presidential elections in a state of war.

9. The U.S. and NATO will suspend participation in the Treaty on Conventional Armed Forces in Europe in response to Russia's formal withdrawal from the pact, according to the Wall Street Journal.

10. Israeli-palestinian conflict - Israeli Defense Minister: Israeli forces have entered the heart of Gaza City; Us media: Biden tells Netanyahu 3-day ceasefire pause could lead to release of some hostages Israeli PM: Keep security control in Gaza without Deadline.

Institutional Perspective

01

CICC

【CICC：Three scenario assumptions for the US economy in 2024】

Looking ahead to 2024, the main challenge for global macro is how to deal with high US dollar interest rates, CICC Research pointed out. In terms of forecasting, there are three scenario assumptions for the US economy in 2024:

1) Base case (60%) : The labor market cools but does not worsen, real estate investment stabilizes, the manufacturing sector restocks, and aggregate demand and inflation slow down slightly. In 2024, GDP will grow by 1.6%, with a high trend before and a low trend after. CPI inflation in Q4 will be around 3.0%.

2) Stagflation (25%) : geopolitical conflicts are heating up, global energy prices remain high, total economic demand is significantly suppressed, and inflation remains high. GDP will grow by 0.5% in 2024, and CPI inflation in Q4 is still 4.0%.

3) Recession (15%) : Excessive Fed tightening triggers financial risk exposure, asset prices fall sharply, economic demand shrinks, and inflationary pressure falls sharply, with 0% GDP growth in 2024 and Q4 CPI inflation falling to 2.0%.

02

Morgan Stanley

【Morgan Stanley：A banking crisis requires government intervention】

“Finance is the mother of all industries,” Morgan Stanley Chairman and CEO James Gorman added. “Society depends on the functioning of the banking system. If the banks fail, society's operating system may collapse.” Therefore, how to regulate the operation of the banking industry is quite important. As for the problems of several regional banks in the United States in March, James said that the regional banks in the United States were excessively concentrated in lending to enterprises in a certain industry. This is not a banking system crisis, but only a problem of individual banks. In the future, attention should be paid to the liquidity and capital level of financial institutions to avoid a crisis.

03

Bridgewater

【Bridgewater：Keep an eye out for debt refinancing in the coming year】

Bob Prince, co-chief investment officer at Bridgewater, the world's largest hedge fund, agreed, arguing that the banks that suffered in March had mismatches between assets and liabilities, but that other banks did not have similar problems. He also said low interest rates over the past 15 years had led to a boom in the private-equity market, but the deal cycle would slow as interest rates rise, calling on investors to watch for debt refinancing in the coming year. On high US debt, he pointed to the transfer of debt from private companies to the government during the pandemic, which had pushed US Treasury debt from 70% of GDP to 120%. It is not easy to refinance the debt. Currently, 27% of US Treasuries are held by foreign investors and 18% by the Federal Reserve. Foreign investors will adjust their holdings due to their own circumstances and geopolitical risks, while the Federal Reserve will adjust its holdings in response to changes in monetary policy.