MHMarkets：November 03, 2023--Fundamental Reminder

TBD US President Joe Biden hosts the Summit of the Americas

09:45 CNY Caixin Services PMI (OCT)

18:00 EUR Unemployment Rate (SEP)

20:00 Fed Governor Barr speaks.

20:30 CAD Employment Change (OCT)

20:30USD Unemployment Rate (OCT) & USD Non Farm Payrolls s.a (OCT)

21:45 USD Markit Services PMI Final (OCT)

22:00USD ISM Non-Manufacturing PMI(OCT)

The next day at 00:45 Fed's Kashkari speaks.

The next day at 01:00 USD Baker Hughes Total Rig Count (NOV/03)

MHMarkets Market Overview

Review of Global Market Trend

Global bond yields fell on Thursday (Nov 2) after the Bank of England also paused rate hikes for two straight meetings following a dovish interpretation of the US Federal Reserve's policy meeting, pushing up global stocks and weighing on the dollar index's move.

The 10-year Treasury yield hit a near three-week low of 4.66%, while the two-year yield fell below 5.0% for days to close at 4.99%. The 10-year Treasury yield hit a fresh intraday low after the jobless claims report, with long-term yields falling more than 10 basis points for two consecutive days.

The dollar index accelerated its retreat to a one-week low, closing down 0.48% at 106.16. The British pound rose to a more than one-week high against the dollar and the Japanese yen briefly regained the 150 mark against the dollar.

The dollar's retreat helped gold rebound, with spot gold briefly back above the 1990 mark and closing up 0.18% at $1,985.91 an ounce. Spot silver settled down 0.81% at $22.76 an ounce.

International oil prices ended a three-day streak of declines, with the United States and Burundi both up more than 2%, while WTI crude closed up 1.98% at $82.45 / barrel. Brent crude settled up 2.48% at $86.92 a barrel.

The three major U.S. stock indexes opened higher, with the Dow Jones Industrial Average up 1.7%, the S&P 500 up 1.89% and the Nasdaq Composite up 1.78%. Qualcomm (QCOM.O) and Tesla (TSLA.O) closed up 6%, Apple (AAPL.O) rose 2% and WeWork (WE.N) fell 11%. The Nasdaq China Golden Dragon Index closed up 2%, with shares of Xpeng Motor (XPEV.N) up 6.6% and Alibaba (BABA.N) up 1.1%.

European stocks rose for a fourth day, their longest winning streak since July. The Stoxx Europe 600 index closed up 1.6%, with real estate and auto stocks among the biggest gainers. Germany's DAX30 closed up 1.49%, Britain's FTSE 100 up 1.41%, France's CAC40 up 1.85%, Europe's Stoxx 50 up 1.92%, Spain's IBEX35 up 2.02% and Italy's FTSE MIB up 1.77%.

Market Focus

1. The Israeli-Palestinian conflict has killed more than 9,000 people in Gaza; Israel's army says its ground forces have completed the siege of Gaza City and says the word “ceasefire” is not on the table; Us media: Blinken will urge Israel to suspend operation to guarantee the safe release of hostages; There have been 28 attacks on US military targets in the Middle East in the past 20 days. Hizbullah DENIES THAT Iranian MILITIAS HAVE ARRIVED IN SOUTHERN Lebanon.

2, the Bank of England left its benchmark interest rate unchanged at 5.25%, in line with market expectations. Boe Governor Bailey stressed that policy may need to remain tight for a long time; Further rate increases are needed if there are signs that high inflation is more persistent; It is too early to talk about interest rate cuts. After the interest rate announcement, the OIS market fully priced in the BOE's first 25bps rate cut in August 2024.

3. Sources: The Bank of Japan plans to exit its easy money policy next year, possibly raising short-term interest rates to zero from -0.1% next spring.

4. Japanese Prime Minister Fumio Kishida on Thursday announced a massive economic stimulus package worth about 17 trillion yen ($113 billion), with extensive tax rebates and subsidies for low-income households.

5. The average rate on a 30-year fixed-rate loan fell to 7.76% from 7.79% last week, Freddie MAC said in a statement Thursday. It was the first decline in eight weeks, but remained close to a two-decade high.

6. U.S. jobless claims for the week ended Oct. 28 hit 217,000, the highest since the week ended Sept. 9; The number of people filing new claims for unemployment benefits rose last week for the sixth straight week, a sign that jobless workers are having a harder time finding new jobs.

7. The monthly rate of factory orders in the US recorded 2.8% in September, the largest increase since January 2021.

8. U.S. labor productivity rose by the most since 2020 and labor costs fell, helping to cushion the impact of recent wage increases on inflation.

9. Gundlack: US will be in recession next year, Fed may cut interest rates by at least 200 basis points. Jamie Dimon, CEO of jpmorgan Chase & Co., said the Fed could raise rates another 75 basis points.

10. EUR manufacturing PMI final for October came in at 43.1, expected at 43 and last at 43. Germany's manufacturing sector remained under pressure in October. French manufacturing contracted further in October. The analysis said that the eurozone manufacturing industry is about to hit the bottom and is expected to recover in the first half of next year.

Institutional Perspective

01

TD Securities

【TD Securities：Go long the US 10-year Treasury ahead of the non-farm payrolls data】

They have placed a strategic long position in the 10-year Treasury ahead of Friday's nonfarm data, citing the inability of the yield to move above the key 5% level and a worsening U.S. economic outlook, wrote Gennadiy Goldberg and Molly McGown, interest-rate strategists at TD Securities.

“We expect data to start softening in the coming months and see a recession in Q2 2024, which will put downward pressure on rates,” the strategists wrote. “Friday's payrolls report should also start to show some moderation.” The main risk to trading is a “soft landing” in the US and a rise in the term premium, but the cost of holding a position is now lower.

02

ANZ Bank

【ANZ Bank：Saudi Arabia's voluntary curbs are forecast to keep the market short by 2 million barrels a day in the fourth quarter this year】

Conflict in the Middle East puts Iranian oil production and exports at risk, ANZ said. Saudi Arabia's voluntary production cuts are forecast to remain in place this year, resulting in a deficit of 2 million barrels a day in the fourth quarter; A wider conflict in the Middle East would threaten the 20 million barrels a day of oil that flow through the Strait of Hormuz, pushing prices toward $120 a barrel.

03

Morgan Chase

【Morgan Chase：The Federal Reserve may keep raising interest rates】

JPMorgan Chase Chief Executive Jamie Dimon said on the 2nd that the Federal Reserve may continue to raise the federal funds rate because inflation remains “sticky”.

Dimon said in an interview with U.S. media on the same day that the Fed made the right decision to maintain the interest rate at 5.25% to 5.5% after its November monetary policy meeting on Monday. But with “inflation likely to prove more troublesome than expected” and the fiscal and monetary stimulus of the past few years more powerful than expected, bringing unemployment to “exceptionally low” levels, the Fed could still continue to raise rates, perhaps by 25, 50 or 75 basis points.

Mr Dimon sees “long-term inflationary effects” from decades of low interest rates. As the Fed raises interest rates quickly, markets could face “sea change,” with big federal deficits, rising domestic spending and an aging population among the risk factors. “At some point [Fed quantitative tightening] will disrupt the market.” Mr. Dimon said.