MHMarkets：November 17, 2023--Fundamental Reminder

TBD Hang Seng Index Company announces the results of the index series review

15:00 GBP Retail Sales MoM (OCT)

16:30 ECB President Lagarde Speaks

18:00 EURInflation Rate YoY Final (OCT) & EURInflation Rate MoM (OCT)

21:30 USD Housing Starts YoY (OCT) & USDBuilding Permits (OCT)

22:45 Fed Goolsbee Speaks

MHMarkets Market Overview

Review of Global Market Trend

On Thursday, unemployment data showed weakness in the labor market, reinforcing the view that the Fed is unlikely to raise interest rates further. The dollar index fell short term, approaching the 104 mark before recovering and finally closing near flat at 104.39. Treasury yields fell back to week lows. The yield on the 10-year Treasury note closed at 4.441%; The yield on the two-year Treasury note, which is more sensitive to the Fed's policy rate, closed at 4.85%.

Spot gold rose in a straight line during the session, hitting as high as 1,987.9, before retreating and finally settling up 1.06% at $1,981.32 an ounce, a two-week high. Spot silver briefly rose above the 24 mark before closing up 1.27% at $23.75 an ounce.

International oil prices tumbled to their lowest level since July, dragged down by weak U.S. economic data and swelling crude inventories. WTI crude fell nearly 6% at its deepest point before ending down 4.78% at $72.86 a barrel. Brent crude accelerated losses after losing the 80 mark, ending down 4.34% at $77.44 a barrel.

The three major U.S. stock indexes traded in a narrow range, with the Dow Jones Industrial Average closing down 0.13%, the Nasdaq up 0.12% and the S&P 500 up 0.1%. Wal-mart Stores (WMT.N) closed nearly 8% higher, while Tesla (TSLA.O) fell nearly 4%. The Nasdaq China Golden Dragon Index closed down 3%, with Alibaba (BABA.N) down more than 9%, Bilibili (BILI.O) down 7.7% and Xpeng Motor (XPEV.N) down 6.6%.

Major European stock indexes were mixed. Europe's Stoxx 50 index closed down 0.3%, Germany's DAX30 up 0.24%, Britain's FTSE 100 down 1.01%, France's CAC40 down 0.57%, Spain's IBEX35 up 0.28% and Italy's FTSE MIB down 0.71%.

Market Focus

1, US initial jobless claims rose more than expected to 231,000 last week, the highest in nearly three months. Continuing claims rose to 1.865 million, the highest level in nearly two years.

2, according to the letter, Fed Vice Chairman Thomas Jefferson and Fed Governors Cook and Cougler told a U.S. senator that it wasn't clear how much longer the process of reducing the Fed's balance sheet would continue, but said it might not end anytime soon.

3. Cleveland Fed President Loretta Mester: We need to see more evidence that inflation will reach 2%. It has not yet been decided whether another rate hike is needed. It's (now the question) not about rate cuts, it's about how long we keep a tight stance and [rates] could go higher. Fed Governor Cook: Continued momentum in demand could slow the rate of decline in inflation, alert to the risk of a sharp decline in economic activity.

4. Data showed foreign holdings of U.S. Treasurys fell $17.5 billion in September to their lowest level since May, ending three straight months of increases. China's holdings fell $27.3 billion, the sixth straight month of declines; Japan cut its holdings by $28.5bn.

5. Market news: The U.S. extended its authorization for certain transactions with Venezuela's oil company through May 16, 2024.

6, Opec is looking to expand its legal team to address the challenges posed by the global energy transition. Opec is looking to hire a senior legal adviser and a legal expert, according to a notice on its website.

7. Russian Energy Ministry: Russian Deputy Prime Minister Alexander Novak held a meeting on the domestic fuel market. The meeting noted that domestic fuel prices in Russia were stable and there were no shortages.

8. South Korea is considering a range of options to punish illegal short sellers, including banning them from trading stocks for up to 10 years, the Financial Supervisory Service said on November 16. The authorities are also seeking to restrict South Korean companies from appointing illegal short sellers to senior positions.

9. The U.S. Senate passed legislation aimed at averting a government shutdown and sent it to President Joe Biden.

10. McHenry, Chairman of the House Financial Services Committee: Martin Grunberg, chairman of the Federal Deposit Insurance Corporation, misled the Financial Services Committee, and the Committee will rigorously investigate him.

11, according to CNBC: General Motors (GM.N) union workers approved the company's interim labor agreement with the United Auto Workers (UAW).

12. Israeli-palestinian Conflict - Foreign media: The European Union and the United States support the deployment of UN troops in post-war Gaza, aiming to put pressure on Israel and prevent it from taking effective control of western Gaza City. “Important discovery” inside Gaza's Shifa hospital.

Institutional Perspective

01

Morgan Stanley

【Morgan Stanley strategist：There will be an “incredible amount” of money flowing into bonds once the Fed clearly ends raising rates】

“Contrary to popular belief, falling inflation and lower interest rates aren't necessarily good for stocks,” said Mike Wilson, chief U.S. equity strategist at Morgan Stanley. Once the Fed started cutting rates, there was a “presumption” that money would flood into stocks. But my view is the opposite. Once the Fed made it clear it was done raising rates, there would be an “incredible flow into bonds”. That would come as investors have already trimmed their holdings of bonds. Falling inflation is also bad for stocks because rising prices are what drives gains. Average stock prices (those of non-Big five tech FAAngs) are now positively correlated with the rate of change in inflation. Whenever inflation falls like it did today, it's usually not good for stocks in general because it's bad for earnings growth.

02

Societe Generale

【Societe Generale：Strong central bank gold purchases and the accompanying broad dedollarization theme are expected to continue to be long-term supportive drivers for gold, but most of the impact should be outside our forecast horizon】

Societe Generale strategists explored five key drivers for gold prices: interest rate volatility, with volatility in the interest rate space likely to impact the upside as US rates peak. If rates markets calm down, that could be a drag on gold prices; Interest rates have peaked and have fallen further and earlier in the U.S. than in other OECD economies, suggesting the dollar could weaken going forward, providing a positive for gold; A US recession and with a US recession looming (however mild) there is a chance the Fed will have to start cutting interest rates before there is a sticky change in inflation, reducing the cost of holding and boosting gold's expected returns; Political risk, the risk premium is based on a low probability, high impact scenario in which Iran is directly involved in the conflict. This risk, while not a base case, should continue to provide medium-term support to gold prices; Central banks, expect strong central bank gold purchases and the accompanying broad dedollarization theme to continue to be a long-term supportive driver for gold, but most of the impact should be outside our forecast horizon.

03

U.S. Bancorp

【U.S. Bancorp：Economic data so far confirm that for now we are in the midst of a mild deceleration】

“The economic data so far confirm that for now we're in a mild deceleration, with inflation coming back down but no signs of a major contraction,” said Tom Hainlin, senior investment strategist at U.S. Banco Wealth Management. “It's like a Goldilocks scenario where inflation decelerates, but not too fast.”