MHMarkets：October 19, 2023--Fundamental Reminder

October 19, 2023--Fundamental Reminder

09:30 Monthly housing price report of 70 large and medium-sized cities in China

20:30 USD Initial Jobless Claims (OCT/14) & USD Philadelphia Fed Manufacturing Index (OCT)

21:00Fed vice presidentJefferson speaks.

The next day at 00:00 Fed presidentPowell speaks.

01:20 Feds Goolsbee participates in the Q&A

05:30 Fed Harker speaks on the economic outlook. 

Market Overview

Review of Global Market Trend

Wednesday's housing starts data, though weaker than expected, and Fed Governor James Waller's reversal that the central bank may need to keep raising rates, signaled support for holding fire. The dollar index moved higher, closing up 0.33% at 106.58.

The sell-off intensified, with the yield on the 10-year Treasury note rising as much as 8 basis points, topping 4.9%t for the first time since 2007, to close near 4.91%; The yield on the two-year Treasury note rose as much as 3 basis points to 5.24%, its highest since 2006, before closing near 5.21%.

Spot gold benefited from rising risk aversion on the prospect of a wider Israeli-Palestinian conflict, rising nearly $40 to $1962.5 before easing to end the day up 1.28% at $1947.81 an ounce. Spot silver settled up 0.22% at $22.85 an ounce.

Crude oil rose on the potential escalation of the Israeli-Palestinian conflict that could disrupt supplies. After Iran called for an oil embargo on Israel, WTI crude briefly pushed past $90 and closed up 0.54% at $88.14 a barrel. Brent crude approached $93 earlier in the session, closing up 0.47% at $91.3 a barrel.

The three major U.S. stock indexes closed down collectively, with the Dow Jones Industrial Average down 0.98%, the Nasdaq down 1.62% and the S&P 500 down 1.34%. Nvidia closed down nearly 4% and is down nearly 8% for the week. The Nasdaq China Golden Dragon Index closed down 2.2%, with Xpeng tumbling more than 10%, NIO down more than 7% and Alibaba down 1%.

Major European stock indexes fell collectively, with Germany's DAX30 closing down 1.01%, Britain's FTSE 100 down 1.15% and the Euro Stoxx 50 down 1.11%.

Market Focus

1. The Palestine-Israel conflict escalated, and the British media reported that Biden privately supported the entry of Israeli ground troops into Gaza; Firing at military posts on the Lebanese border; The United States has approved some evacuations from Lebanon; Israel has reiterated that Jihad is responsible for the attack on a Gaza hospital; White House: Assessment Shows Israel not Responsible for Hospital Attack The Security Council once again failed to adopt a draft resolution on the Israeli-Palestinian situation; Iran has called for sanctions such as an oil embargo; Biden briefly visited Israel for talks with its prime minister; Blinken met with Pakistan's president; Israel's military has reportedly been asked to pause its campaign against Hamas during Biden's visit.

2. SEC Chairman: Still weighing a bitcoin spot ETF proposal.

3. The U.S. will temporarily lift some key sanctions targeting Venezuela's oil and gas sector after welcoming an agreement between the government and the opposition on presidential elections. The U.S. Treasury Department today issued a stay authorizing transactions with the Venezuelan oil and gas sector for six months.

4. The second round of voting for speaker of the U.S. House of Representatives is still inconclusive. The next vote will be held on Thursday.

5. Us Treasury data: China cut its holdings of US bonds by $16.4 billion in August, the fifth consecutive month of selling.

6. Tesla's Q3 gross margin was 17.9%, revenue increased 9% year on year, and electric trucks are expected to be delivered by the end of November.

7. Fed Governor Waller signaled support for holding fire; Beige Book: Little change in economic activity since September and overall prices continue to rise moderately; Mr. Williams: Interest rates need to stay high for a while to keep inflation down; Harker thinks the Fed should extend its pause.

8. The U.S. consumer is on firmer footing thanks to lower interest rates and loan extension programs during the pandemic, according to new research from the New York Fed. Still, some households could see more stress over time as student loan payments resume and interest rates rise.

9. Us EIA crude oil inventories fell by 4.491 million barrels in the week to October 13th, against expectations of 0.3 million barrels lower and up by 10.176 million barrels previously.

10. According to the Iranian Students News Agency, there has been a widespread fire at the KANGAN gas processing plant in Iran.

11. Chevron Australia spokesman: The Australian Confederation of Trade Unions has informed the company that strike action scheduled to begin on Thursday will no longer go ahead.

12. German and British officials: Europe won't restore energy ties with Russia even if the Russia-Ukraine conflict ends

13. According to the Interfax news agency, the Russian State Duma has finally considered and approved legislation to abolish the nuclear Test Ban Treaty.

14. Russia doesn't plan to use the price of Urals crude to calculate the 2024 budget rule, and instead is quoting a cutoff price of $75 a barrel for North Sea Brent crude, according to independent Russian media outlet RBC, citing a Finance Ministry source.

15. In unscheduled bond purchases, the Bank of Japan proposed direct purchases of 300 billion yen of JGBS (with maturities of 5 to 10 years remaining) starting October 19 and 100 billion yen of JGBS with maturities of 10 to 25 years remaining.

Institutional Perspective

01

Morgan Chase

【Morgan Chase:Now is a good time for investors to increase their allocation to gold】

Marko Kolanovic, chief market strategist at jpmorgan, said that U.S. and global equities remain overvalued and political risks continue to mount, making it a good time for investors to increase their allocation to gold, KitcoNews reported.

02

Bank of America

【Bank of America：Global fund managers find reliable buy signals out of the stock market.】

 According to Bank of America's global fund manager survey, stocks just flflered a solid buy signal. The survey, which measures sentiment among professional investors on Wall Street, showed that respondents' cash allocations jumped above 5%. That triggers a contrarian buy signal for stocks and has historically preceded strong future gains, the bank said.

Michael Hartnett of Bank of America says: “Since 2011, a 'buy' signal has produced a 2% return for the S&P 500 after two months, 4% after three months and 7% after six months.”

03

RABO BANK

【RABO BANK：USD/JPY is unlikely to break above 150】

On Wednesday (Oct 18), the latest analysis from Rabobank suggested that incoming news strongly hints at another shift in BOJ policy to support the domestic currency, “The USDJPY rate is unlikely to break above the 150 level thanks to a potential shift in BOJ policy, Allowing the key bond yield to test the 1.0% level above, thereby providing support to the yen, ”he said.