MHMarkets：December 7, 2023,--Fundamental Reminder

09:00 BOJ Gov Kazuo Ueda Delivers Semi-Annual Report

18:00 EUR GDP Growth Rate YoY Final (Q3) & EUR Employment Change QoQ s.a (Q3)

20:30 USD Challenger Job Cuts (NOV)

21:30 USD Initial Jobless Claims (DEC/02)

23:00 USD Wholesale Inventories MoM (OCT)

Market Overview

Review of Global Market Trend

On Wednesday, the ADP report fell short of expectations reconfirming the softening of the job market, U.S. bond yields continued to sink, the 10-year U.S. bond yields close to the 4.1% mark, which was the lowest level since September 1, closing at 4.167%; more sensitive to the Fed's policy rate of two-year U.S. bond yields retracted all of the day's gains during the session, and ultimately closed up slightly higher at 4.597%.

With the market fully priced in the prospect of a Fed rate cut, while expectations for other central banks are still deepening, the U.S. dollar index stood at 104, and eventually closed up 0.309% at 103.95.

Given the weakness in U.S. bond yields, spot gold stabilized, hitting an intraday high of $2035.71 per ounce, and ultimately closing 0.34% at $2026.19 per ounce; spot silver lost ground at $24 per ounce, and ultimately closed 0.92% lower at $23.9 per ounce.

U.S. gasoline inventories surged to raise concerns about demand, investors doubt that OPEC+ production cuts can offset the impact of oversupply in other oil-producing countries and weak global oil demand, international crude oil lower for the fifth consecutive trading day. WTI crude oil for the first time since the beginning of July to the first time to fall through the 70 U.S. dollar mark, and ultimately closed down 4% at 69.36 U.S. dollars per barrel; Brent crude closed down 3.5% at $74.55 per barrel, below $75 per barrel for the first time since the end of June this year.

The three major U.S. stock indexes opened higher, with the Dow closing down 0.19%, the S&P 500 down 0.39%, and the Nasdaq down 0.59%. AMD.O, which released its H100 contender, closed down 1.3%, and NVDA.O fell more than 2%. The Nasdaq China Golden Dragon Index rose 0.5%, NIO.N rose more than 4%, XPEV.N and BILI.O rose more than 3%, and BABA.N fell 1%.

Major European stock indexes generally closed higher. Europe's Stoxx 50 index closed up 0.86%, Germany's DAX 30 index closed up 0.78%, and Britain's FTSE 100 index closed down 0.31%.

Market Focus

1. U.S. November ADP employment recorded 103,000 people, compared with market expectations of 130,000, which was the fourth consecutive month of missing expectations; wages of employed persons increased by 5.6%, which was the lowest payroll growth since September 2021.

2. As of the week of December 1, U.S. gasoline inventories exceeded expectations by 5.42 million barrels, which was much higher than market expectations of 1.027 million barrels. EIA crude oil inventories recorded a decrease of 4.633 million barrels in the week, which was the biggest drop since the week of September 1, 2023, ending the previous trend of six consecutive weeks of increases.

3. Reuters survey showed that OPEC oil production in November fell 90,000 barrels to 27.81 million barrels per day from October, which was the first decline since July.

4. Russia's seaborne crude exports averaged about 3.04 million barrels per day in the four weeks ending Dec. 3, falling to the lowest level in three months as Black Sea storms disrupted crude shipments for the third week in a row.

5. Algeria reiterated that OPEC+ production cuts could be extended beyond the first quarter of next year.

6. Traders fully priced in a 150 basis point rate cut by the ECB in 2024.

7. The Bank of Canada kept its policy rate unchanged at 5% for the third consecutive meeting, in line with market expectations.

8. Former U.S. House Speaker McCarthy announced he will resign from Congress at the end of the year.

9. U.S. Department of State: According to previous instructions, up to $175 million in weapons and equipment will be provided to Ukraine. U.S. Secretary of State Blinken: the latest assistance program will be one of the last U.S. assistance to Ukraine.

10. According to TASS: The upper house of the Russian parliament proposes to hold presidential elections on March 17, 2024.

Institutional Perspective

01

Deutsche Bank

【Deutsche Bank: It is expected that the ECB will start cutting interest rates in April next year, with a full year rate cut of 150 basis points】

The ECB will cut interest rates in April 2024 instead of June as previously expected, Deutsche Bank economists said. The Frankfurt-based ECB is expected to cut interest rates by a total of 150 basis points next year, 50 basis points each at its April and June meetings, Deutsche Bank analysts such as Mark Wall said in a client report on Wednesday. Given recent inflation data and comments from policymakers, there is even a strong possibility of a rate cut in March next year, Deutsche Bank analysts said.

02

Goldman Sachs

【Goldman Sachs: It is expected that the New Zealand Federal Reserve will enter an easing cycle starting from the fourth quarter of next year】

Looking ahead, Goldman Sachs notes that it continues to expect the New Zealand Federal Reserve to keep the official cash rate (OCR) steady at 5.5% before gradually entering an easing cycle from the fourth quarter of 2024. Against this backdrop, Goldman Sachs forecasts an OCR of around 80 basis points above current market pricing by the end of 2024. According to Goldman Sachs, today's hawkish bias from the NZ Fed is in part an attempt to build anticipation for a “higher for longer” interest rate scenario.

03

Moodys

【Moody's: Australia's GDP growth in the third quarter may slow down month on month】

Moody's Analytics said in its weekly Asia-Pacific Economic Preview report that Australia's GDP growth is likely to slow in the third quarter on a year-on-year basis, with household spending set to slow. GDP growth is expected to slow to 0.2% in the third quarter from 0.4% in the previous quarter.