MHMarkets：December 5, 2023,--Fundamental Reminder

TBD Domestic refined oil opens a new round of price adjustment window

09:45 CNY Caixin Services PMI (NOV)

11:30 AUD RBA Interest Rate Decision

17:00 EUR Services PMI Final (NOV)

17:30 GBP Services PMI (NOV)

18:00 EUR PPI MoM (OCT)

22:45 USD Markit Services PMI Final (NOV)

23:00 USD ISM Non-Manufacturing PMI (NOV)

23:00 USD JOLTs Job Openings (OCT)

Next Day 05:30 USD API Crude Oil Stock Change (DEC/01)

Market Overview

Review of Global Market Trend

On Monday, U.S. bond yields rebounded slightly, with the 10-year U.S. bond yield falling more than 10 basis points to close at 4.257%; the two-year U.S. bond yield, which is more sensitive to Fed policy rates, rebounded even more to close at 4.635%. The U.S. dollar index recovered some of its lost ground after three consecutive weeks of declines and rallied to a one-week high, eventually closing down 0.436% at 103.65.

Spot gold opened storming more than $70, the highest hit 2144.61, a new record high, and then continued to give back the gains, more than $120 than the daily high, finally closed down 2.07% at $2029 per ounce; spot silver also high and fell back, finally closed down 3.83% at $24.5 per ounce.

Despite Saudi Arabia's statement that production cuts can be extended beyond the first quarter of next year, the international crude oil trend remains sluggish. WTI crude oil closed down 1.5% at $73.23 per barrel; Brent crude oil continued to fall below the $79 mark, and finally closed down 1.21% at $78.14 per barrel.

The three major U.S. stock indexes closed collectively lower. The Dow closed down 0.12% or 40 points, the Nasdaq closed up 0.84%, and the S&P 500 lost 0.54%. NVDA.O closed down 2.6%, while MSFT.O and TSLA.O both lost more than 1%. The Nasdaq China Golden Dragon Index fell 2.1%, MNSO.N lost 14%, and NIO.N and XPEV.N rose more than 2%.

Major European stock indices were mixed. Europe's Stoxx 50 closed down 0.08%, Germany's DAX 30 closed up 0.04% and Britain's FTSE 100 closed down 0.22%.

Market Focus

1. U.S. factory orders recorded a 3.6% monthly decline in October, which was a larger-than-expected 2.6% drop and the lowest level since April 2020.

2. The New York Federal Reserve released a report on Monday showed that its multi-core trend inflation indicator (MCT) was reported at 2.6% in October, down from 2.88% in September.

3. Saudi Energy Minister: OPEC + production cuts 2.2 million barrels per day commitment will be honored. Production cuts “absolutely” can be (extended to) after the first quarter of next year. We will not agree to fossil fuel phase-down.

4. U.S. Deputy Secretary of Energy: The U.S. will take advantage of low oil prices to replenish its reserves, but due to physical constraints, U.S. oil reserve replenishment is limited.

5. Russian President Vladimir Putin will visit the UAE and Saudi Arabia this week, according to media citing his aides.

6. Israeli General: ground forces have almost completed their mission in the northern Gaza Strip, and it is expected that the military operation “will continue at the current intensity for at least two months”. U.S. media: Israel is considering a plan to flood Gaza tunnels with sea water.

Institutional Perspective

01

Barclays

【Barclays: The Fed will begin cutting interest rates in the second quarter of 2024, with a full year rate cut of 100 basis points.】

The U.S. economy will remain resilient next year, which will make the Fed cautious about cutting interest rates, Barclays said in a report on Monday. Barclays said, “The Fed is expected to begin a significant easing cycle in the second quarter of 2024, cutting rates by 100 basis points in 2024, another 100 basis points in 2025, and another 100 basis points in 2026, stabilizing rates at 2.75-3%.” That means the Fed will make four rate cuts next year, each by 25 basis points.

02

Goldman Sachs

【Goldman Sachs: The market's prediction of the Fed's interest rate cut is excessive, and it is recommended to hedge profits with options.】

Goldman Sachs says financial markets are overly optimistic about how much the Fed will cut interest rates next year, giving options traders the opportunity to make a profit by doing the right thing. Strategists such as Praveen Korapaty point out that the market expects the Fed to cut interest rates by 125 bps over the next 12 months, with a cut of 50 bps by the end of June, which is much more aggressive than Goldman Sachs' own forecasts, which have the bank believing that there will be only one cut in 2024, by 25 basis points. Goldman strategists recommended selling SOFR 95.25 calls for June 2024 expiration, shorting bets on a front-loaded rate cut. The SOFR options are tied to the secured overnight financing rate, which closely tracks market expectations for the Fed's policy path. The options expire on June 14, two days after the central bank's June policy statement.

03

CITIC Securities

【CITIC Securities: The expectation of the Fed's interest rate cut is accelerating, and the gold sector is expected to usher in an excellent layout time.】

CITIC Securities research report pointed out that with the U.S. inflation trend down and economic damage signals frequently revealed, we believe that the Fed interest rate hike or is nearing the end, interest rate cuts are expected to accelerate the warming of the gold sector is expected to usher in an excellent layout of the time. At the same time, with the geopolitical tension and de-dollarization wave continues, safe-haven attribute and credit attribute enhancement will provide medium- to long-term support for the gold price. We expect the subsequent gold price is expected to continue to record highs. We are optimistic about the configuration value of the gold sector, maintain the gold industry “stronger than the market” rating.