MHMarkets：November 21, 2023--Fundamental Reminder

08:30 The RBA releases minutes of its November monetary policy meeting.

18:15 BOE Governor Bailey testifies at Parliament.

21:30 CAD Inflation Rate MoM (OCT)

23:00 USD Existing Home Sales (OCT)

The next day at 03:00, Fed releases minutes of its November monetary policy meeting.

MHMarkets Market Overview

Review of Global Market Trend

The dollar index extended its downward trend on Monday, falling as low as 103.37, a near two-month low, before ending down 0.31% at 103.49. Us Treasury yields fell first and then rose. The yield on the 10-year Treasury note closed at 4.426%; The yield on the two-year Treasury note, which is more sensitive to the Fed's policy rate, rose above 4.9% before closing at 4.919%.

Spot gold fell and then rose, falling as low as $1,965.54 in European trading before recovering most of its losses but not back above the 1,980 mark to end down 0.14% at $1,978.05 an ounce. Spot silver fell more than 1% on the day and hit an intraday low of $23.24 before ending down 1.21% at $23.44 an ounce.

Both oil prices continued to rebound on the possibility that Opec + could cut production this week. WTI crude rose more than 2% and was back near $78, but then gave up some gains to end up 1.99% at $77.56 a barrel. Brent crude briefly approached $83 before ending up 1.76% at $81.97 a barrel.

U.S. stocks rose on a better-than-expected auction of 20-year Treasury bonds, with all three major indexes closing higher. The Dow Jones Industrial Average closed up 0.58%, the S&P 500 rose 0.74% and the Nasdaq rose 1.13%. Microsoft (MSFT.O) and Nvidia (NVDA.O) both closed at record highs, up 2% and 2.2%, respectively. Nasdaq China's Golden Dragon Index rose more than 3.5%, while Fogcore Technology (RLX.N) rose 17%, Xpeng Motor (XPEV.N) rose 8.5% and Alibaba (BABA.N) rose more than 1%.

Major European stock indexes were mixed. Europe's Stoxx 50 index closed up 0.04%, Germany's DAX30 index closed down 0.11% and Britain's FTSE 100 index fell 0.11%.

Market Focus

1. Fed Vice Chairman Barr said the Fed may be near or at its peak in interest rates; San Francisco Fed President Richard Daly argued that risky and “ambiguous” economic conditions meant the Fed should pursue gradualism; Boston Fed President John Collins said the data is so mixed right now that the Fed is prepared to be patient. Won't rule out further rate increases; Richmond Fed President Paul Barkin argues that inflation remains stubborn and justifies keeping interest rates higher for longer.

2. Opec kingmaker the United Arab Emirates will raise its crude output target to 3.075 million barrels a day in January, an increase of about 135,000 barrels a day from last month. Uae Energy Minister: Current conflict won't have short-term impact on oil The lack of oil investment remains a medium-term problem.

3. There is a 53% chance that Opec + will deepen output cuts this week, according to crude-options trading data. Goldman Sachs expects Saudi Arabia's 1 million b/d cut to be extended through Q2 2024.

4. The Treasury Department sold $16 billion in new 20-year notes at a winning yield of 4.780%, down from the 4.790% level where bids closed at 1 p.m. Et. Primary dealers were allocated 9.5%, down from the previous value, while indirect bidders were allocated 74.0% and direct bidders 16.5%. The bid multiple was 2.58 times, compared with an average of 2.52 times for the past six new bond issues.

5. Bank of England Governor Bailey: Food and energy still pose upside risks to inflation and may have to consider raising interest rates again.

6. The U.S. Justice Department is demanding more than $4 billion in damages from the trading platform Binance to settle a criminal case. The talks between the Justice Department and Binance include the possibility of criminal charges in the US against its founder, Changpeng Zhao, as well as investigations into alleged bank fraud and sanctions violations, according to people familiar with the matter.

7. United Auto Workers members ratify labor contracts for Ford Motor, General Motors, and Stellantis.

Institutional Perspective

01

Bank of America

【The BOE may not cut interest rates until next year as inflation is expected to remain high, according to analysts at Bank of America.】

Hugh Peel, chief economist at Bank of America, said investors' expectations of a rate cut by the boe before next summer were “not reasonable” and that it would take until 2025 for the Bank to reduce rates from a 15-year high of 5.25%. Bofa expects the UK market to have to wait until February 2025 for the first reduction in borrowing costs, with the base rate falling by one percentage point to 4.25% within that year. Agni Staniger, the bank's rates strategist, warned in a note to clients: We think the outlook for UK inflation is tougher than the boe expects.

02

Deutsche Bank

【Deutsche Bank pointed out that the market has misjudged the Fed's dovish turn six times】

Stocks have rallied strongly over the past month as investors believe the Fed will turn dovish. Historically, this is not uncommon. In fact, markets have misjudged the Fed's dovish turn six times in the past two years, Deutsche notes. So are markets happy too soon again？ The S&P 500 has surged 9% since the end of October as recent economic data showing slowing job growth and weaker-than-expected inflation convinced many on Wall Street that the Fed's tightening cycle was over.

03

ANZ Bank

【ANZ Bank：The U.S. economy may have a soft landing and a rate cut is expected in the third quarter of next year】

Mr. Martin, the ANZ economist, said the U.S. economy is expected to slow in 2024, but a soft landing seems likely. The impact of the Fed's aggressive tightening will be felt next year as the effects of fiscal stimulus fade. Anz expects U.S. GDP growth to average 1.1% next year, down from an estimated 2.4% in 2023. A period of mild economic contraction cannot be ruled out, but it is consistent with a soft landing scenario. The 2024 U.S. presidential election is unlikely to have a material impact on growth or policy arrangements, and the Fed will likely start cutting rates in the third quarter.