MHMarkets：November 10, 2023--Fundamental Reminder

15:00 GBP GDP Growth Rate YoY 2nd (Q3)

20:30 Fed Logan speaks

20:30 ECB President Christine Lagarde speaks

23:00 USD1 Year Inflation Expectation (NOV) & USD Michigan Consumer Expectations Prel (NOV)

The next day at 02:00 USD Baker Hughes Total Rig Count (NOV/10)

MHMarkets Market Overview

Review of Global Market Trend

On Thursday, the dollar index fell to session lows on fresh signs of labor-market weakness in U.S. unemployment data, then jumped closer to the 106 mark on Powell's hawkish remarks before closing up 0.36% at 105.91.

Yields resumed their rally after an auction of 30-year Treasuries showed lackluster demand, with the 30-year yield closing at 4.772% and the 10-year yield at 4.628%. The yield on the two-year Treasury note, which is more sensitive to the Fed's policy rate, recovered 5% to 5.029%.

Spot gold snapped a three-day losing streak, coming off a near three-week low and briefly breaking above $1,960 before settling up 0.45% at $1,958.6 an ounce. Spot silver closed up 0.48% at $22.64 an ounce.

International oil prices sideways shock.  Brent crude briefly breached the 81 mark before erasing most of the day's gains to end up 0.23% at $79.87 a barrel.

Days of gains for the three major U.S. stock indexes ended on Powell's hawkish tone and a chilly 30-year bond auction, with the Dow Jones Industrial Average down 0.65%, the Nasdaq down 0.94% and the S&P 500 down 0.8%. ARM (ARM.O) and Tesla (TSLA.O) both fell more than 5% as Biden backed the UAW in organizing Tesla workers. The Nasdaq China Golden Dragon closed down 2%, with NIO (NIO.N) down more than 5%, LI Auto (LI.O) down more than 4% and Alibaba (BABA.N) down nearly 2.5%.

Major European stock indexes collectively closed higher. Europe's Stoxx 50 index closed up 1.21%, Germany's DAX30 index up 0.81%, Britain's FTSE 100 index up 0.73%, France's CAC40 index up 1.13%, Spain's IBEX35 index up 1.31% and Italy's FTSE MIB index up 0.74%.

Market Focus

1. Fed Chairman Powell: The Fed will not hesitate to tighten monetary policy further if appropriate. Following Mr. Powell's remarks, traders in short-term interest-rate futures in the United States pushed forward their expectations for the first Fed rate cut to June from May next year.

O 'Neill Pace, acting president of the Federal Reserve Bank of St. Louis: It is too early to rule out further interest rate hikes at this stage. Fed President Richmond Barkin: I don't think we're done raising rates; Inflationary pressures in the services sector persist. Fed Governor Bowman reiterated expectations that further increases in the policy rate will be needed. Atlanta Fed President Jeffrey Bostic: Policy is probably restrictive enough. The Fed will maintain a tight stance until it makes sure inflation falls back to 2%. Chicago Fed President Goolsbee: The Fed will need to be alert to the risk of interest rate overshooting. It is too early to talk about whether or when the focus will shift to cutting rates.

2. The U.S. Treasury issued $24 billion in 30-year notes at a yield of 4.769%, compared with pre-issue trading at 4.716% when bids closed at 1 p.m. Et. The sell-off ahead of the bid deadline pushed yields up more than 10 basis points.

3. The Fed accepted a total of $993.314 billion from 94 counterparties in fixed rate reverse repo operations, the first time it fell below $1 trillion in two years.

4. The number of Americans continuing to claim jobless benefits rose for a seventh straight week to 1.83 million, the highest level since mid-April, adding to evidence that the labor market is cooling.

5. U.S. House Speaker Mike Johnson had planned to unveil his proposal to fund the government temporarily as early as Thursday, but intense Republican infighting could delay any spending plan. The U.S. government is once again preparing for a possible shutdown.

6. Bank of Japan Governor Kao Ueda said the BOJ will be cautious in raising interest rates to avoid bond market volatility and any adverse impact on financial institutions. He warned that unwinding the central bank's ultra-loose monetary policy would be a “serious challenge”.

7, ECB Vice President Guindos said any talk of lower borrowing costs in the coming months is premature and upside risks to inflation remain.

8. Saudi Arabia's energy minister, when asked about the drop in oil prices on Thursday, said that speculators were to blame for the recent decline in crude prices. The market's failure to distinguish between export growth and output growth is “It's just messing around”.

Institutional Perspective

01

Bank of America

【Bank of America sharply comments on the US economy: the FED will raise interest rates once again!】

Bank of America Chief Executive Brian Moynihan said Wednesday he expects the U.S. economy to achieve a soft landing, avoiding a recession even as consumer spending and business borrowing slow. “Our research team is the best in the industry and they think the economy has turned to a soft landing,” he said in an interview. “They expect a slowdown in the middle of next year.” At the same time, the bank's consumer spending has slowed to between 4% and 4.5% in October, about half of what it was earlier in the year, while business customers aren't borrowing as much, he said. However, he did not expect “massive” consumer defaults.

02

Morgan Stanley

【Morgan Stanley：The global wealth management business is under investigation by the Fed】

Morgan Stanley's global wealth management unit is under scrutiny by the Federal Reserve over whether the bank has adequate controls to prevent money laundering by high-net-worth foreign clients, the Wall Street Journal reported. The Fed has been looking into how Morgan Stanley vets the identities of foreigners and their sources of funds before taking them on as clients, according to people familiar with the matter. The routine review was escalated a few years ago after regulators found the bank's due diligence on clients and anti-money laundering efforts to be inadequate. The Fed has privately rebuked Morgan Stanley for not making all the required changes, and Andy Saperstein, head of the bank's wealth-management business, has been meeting with Fed officials to discuss what he and his team will do about the problems they have uncovered. Wealth management already accounts for nearly 50% of Morgan Stanley's total revenue, according to the report.

03

Black Swan Fund

【Black Swan Fund：U.S. stocks could soar and then pivot sharply when the Fed starts cutting rates.】

Mark Spitznagel, founder and chief investment officer of Black Swan Funds, said U.S. stocks could soar and then pivot sharply when the Federal Reserve begins cutting interest rates. “That's when things get really bad,” Mr. Spitznagel said this week. Mr. Spitznagel worries that the market is trying to reverse more than a decade of reliance on the Fed for support through low interest rates and bond-buying programs. Earlier this year, he told investors we were facing “the biggest tinder barrel time bomb in financial history,” worse even than the run-up to the Great Depression of the late 1920s.