MHMarkets：September 28, 2023--Fundamental Reminder

☆20:30 USD GDP Growth Rate QoQ Final (Q2) & Consumer Spending QoQ Final & USD Core PCE Prices QoQ Final (Q2) & USD Initial Jobless Claims (SEP/23)

22:00 USD Pending Home Sales MoM (AUG)

☆21:00 FOMC member, Chicago Fed president Goolsbee speaks.

The next day at 1:00, Fed Governor Lisa Cook speaks.

The next day at 4:00., Fed Chairman Powell participates in an education industry conference and answers questions from the live audience and online participants.

☆Due to Mid-Autumn Festival, South Korea - Seoul Stock Exchange closed for one day; SHFE, DCE, ZCE, SHGE do not carry out night trading.

Market Overview

Review of Global Market Trend

On Wednesday, as the U.S. economy showed signs of outperforming the rest of the world, the dollar index extended its 10-month high to end up 0.49% at 106.71. The yield on the 10-year Treasury note rose sharply in the session, hitting a 16-year high to close at 4.613%, boosting dollar buying. Non-us currencies collectively came under pressure, with the euro falling back below 1.05 against the dollar for the first time since January. The yen fell as much as 0.5% to 149.77 against the dollar, its weakest level since mid-October.

Spot gold fell for a third straight session, falling below $1,880 an ounce for the first time since March 13 and hitting as low as $1,872.59 an ounce, down more than $30 from the session high, before settling down 1.33% at $1,875.12 an ounce. Spot silver fluctuated to the downside and ended down 1.38% at $22.55 an ounce.

International crude oil climbed as a sharp drop in U.S. crude inventories fueled concerns about tight global supplies. WTI crude rose as much as 4% to $94 a barrel for the first time since November 7 before closing up 3.61% at $93.78. Brent crude settled up 2.02% at $94.31 a barrel.

The three major U.S. stock indexes followed a V-shaped trend throughout the day, with the Dow down 0.2%, the Nasdaq up 0.2% and the S&P 500 up slightly. Chinese stocks outperformed the broader market, with the Golden Dragon index closing up 0.8%, New Oriental up more than 4% and Xpeng Motor up 2.8%. Faraday Future tumbled more than 44%, leaving it with a market value of less than $30 million.

Major European stock indexes were mixed, with the Stoxx Europe 50 closing up 0.11%, Germany's DAX30 down 0.25%, France's CAC40 down 0.05% and Britain's FTSE 100 down 0.43%.

Market Focus

1. Biden: Will take AI-related executive action this fall

2. Us MBAs 30-year fixed mortgage rates rose to 7.41%, the highest in 22 years.

3. Fed's Kashkari: Forecasts one more rate hike, then largely unchanged in 2024; A weaker economy due to strikes and lockdowns would be an argument for less austerity.

4. The US Treasury 10Y rose above 4.6%; Faraday fell more than 65% in the next three days, and its market value was less than $30 million; The spread between U.S. and Burkina oil futures narrowed to within $3, its highest level this year.   

Geopolitical Situation

Conflict Situation

1. Ria Novosti: Traffic on Crimea's Bridges and highways is suspended.

2. Ria Novosti: An air raid alert has been issued in Ukraine's Nikolayev and Dnipropetrovsk regions.

3. The General staff of Ukraine's armed forces reported the loss of 320 Russian troops over the past day, as well as equipment including three tanks, four armored vehicles, 38 artillery systems and 24 tactical drones.

4. Russia has accused the United States and Britain of helping Ukraine attack its naval headquarters in Crimea last week, according to AFP.

5. On September 27 local time, the Russian Ministry of Defense released a war report saying that the Russian army hit Ukrainian personnel as well as armored vehicles, tanks, infantry fighting vehicles and other weapons and equipment in multiple directions.

6. UK MOD: With Russia's 25th Joint Army apparently being spread out to reinforce the front line, a new coordinated Russian offensive is unlikely in the coming weeks. Russia will most likely put elements of its newly formed 25th Joint Force into action for the first time since mid-September 2023, with the formation moving into Ukraine from late August 2023. The 67th Motor Rifle Division and 164th Independent Motor Rifle Brigade of the 25th Combined Army are fighting on the front lines west of North Donetsk and Klimina along the border of Donetsk and Luhansk regions. Since the start of the conflict, Russia has rarely maintained an undeployed army-size group army, which could form the basis for a major new offensive. 

Institutional Perspective

01

Goldman Sachs

Goldman Sachs：The possibility of a government shutdown has seemed real for months and we now think the probability has risen to 90%.

02

SOCIETE GENERALE

【SOCIETE GENERALE：The pound was subdued as interest rate support faded and the dollar rallied】

Sep 26 - The British pound fell on Tuesday as the dollar rose on higher U.S. Treasury yields and last week's BOE decision to leave interest rates unchanged took the prospect of further rate hikes off the table. “The supportive impact of rates on sterling has been cut,” said Kit Juckes, FX analyst at Socgen Bank, in a note. The British pound hit a six-month low against the dollar on Tuesday and was near a four-month low against the euro. Even if the U.K. economy doesn't perform as badly as markets expect, EUR/GBP could gradually rise to 0.90, Mr. Juckes said.

03

MUFG

【MUFG：The Fed stance could push the yield on the 10-year Treasury to 4.75%】

Sep 26 -George Goncalves, head of U.S. macro strategy at MUFG, said in a note that the Fed's goal of keeping rates at higher levels “for longer” could push the 10-year Treasury yield to 4.75%. The Fed may also be happy to let the bond market do some of the monetary tightening work for them, Goncalves said. Mufg has an upside target of 4.5% for the 10-year Treasury yield in the third quarter, with the potential for “another technical breakout” of 4.75% and possibly 5% as the yield hits that level.