MHMarkets：December 12, 2023,--Fundamental Reminder

15:00 GBP Claimant Count Change (NOV) & GBP Unemployment Rate (NOV)

18:00 EUR ZEW Economic Sentiment Index (DEC)

21:30 USD Inflation Rate YoY n.s.a (NOV) & USD Inflation Rate MoM s.a (NOV) & USD Core Inflation Rate YoY n.s.a (NOV) & USD Core Inflation Rate MoM (NOV)

At 01:00 the following day, the EIA releases its monthly short-term energy outlook report

Market Overview

Review of Global Market Trend

On Monday, U.S. bond yields retraced their intraday gains after the 10-year U.S. note was marked down, with the 10-year yield closing at 4.237%; the two-year U.S. yield, which is more sensitive to Fed policy rates, closed at 4.71%. The dollar index stabilized above the 104 mark, eventually closing up 0.087% at 104.1. The yen fell more than 1% during the session as expectations of the Bank of Japan ending negative interest rates in December were dashed.

As investors await guidance from CPI data and the Fed's interest rate resolution, spot gold once fell back below the 1980 mark, and eventually closed down 1.27% at $1981.65 per ounce, which was a new low since November 21; spot silver closed down 1.09% at $22.82 per ounce.

International crude oil closed higher for the third consecutive session, rebounding further from a five-month low. WTI crude oil turned sharply after approaching the 72 mark upward during the session, then rebounded again, eventually closing up 0.22% at $71.49 per barrel; Brent crude oil closed up 0.18% at $76.24 per barrel.

The three major U.S. stock indexes closed collectively higher, with the Dow closing up 0.4%, the S&P 500 closing up 0.39%, and the Nasdaq closing up 0.2%. The Nasdaq China Golden Dragon Index rose 0.28%, XPEV.N rose nearly 5%, TAL.N closed up 4.5%, NIO.N gained 4%, BABA.N fell 1%, and DOYU.O fell 4.5%. M.N closed up 19%.

Major European stock indices were mixed. Europe's Stoxx 50 closed up 0.37%, Germany's DAX 30 closed up 0.21% and Britain's FTSE 100 closed down 0.13%.

Market Focus

1. The New York Fed data show that in November, U.S. consumers' median expectations for inflation in the coming year fell for the second consecutive month, from 3.6% in October to 3.4%, which was the lowest level since April 2021, according to the New York Fed.

2. The U.S. Treasury Department announced the size of 37 billion U.S. dollars of 10-year U.S. Treasury bidding results, the winning rate of 4.296%, higher than the pre-issue rate of 4.282%.

3. According to people familiar with the matter, the Bank of Japan officials believe that there is no need to rush to remove the world's last negative interest rate policy this month, because they have not yet seen enough evidence of wage growth to support sustainable inflation.

4. Nasdaq 100 components will be adjusted, DoorDash and other included, Zoom and other removed.

5. NVDA.O CEO Jen-Hsun Huang said, Nvidia will expand cooperation with Vietnam, Nvidia hopes to build Vietnam into the company's “second home”.

6. Guyana's President: despite the threat of Venezuela, oil production continues.

7. Draft COP28 agreement calls for rapid reduction of untreated coal, reducing fossil fuel use by 2050.

8. India's Deputy Petroleum Minister: India's refining capacity to increase by 22% by 2028.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs: the Fed will cut interest rates twice next year】

According to Goldman Sachs' latest forecast, the Fed will make two rate cuts next year, and the first rate cut will be in the third quarter. The bank had previously predicted that the Fed will only begin the first rate cut in December next year, and this time the time of the first rate cut made forward adjustments, the reason is that inflation fell better than expected. Currently, the Fed is keeping its benchmark interest rate unchanged between 5.25% and 5.5%. The two rate cuts mean that the federal funds rate will fall to 4.875% by the end of 2024, compared to the bank's previous forecast of 5.13%.

02

Citigroup

【Citigroup: OPEC+ members can work together to meet production cut quotas, and oil prices could balance out in the $70-$80 per barrel range next year.】

If OPEC+ members can work together to meet production cut quotas, and oil prices could balance out in the $70-$80 per barrel range next year. However, if OPEC+ abandons the cuts and puts its idle capacity back into production, oil prices could plummet by 30% to 50%--a scenario that is not unlikely, although OPEC+ should be reluctant to try it on its own initiative. However, Leighton also mentioned, “I think that option [of abandoning production cuts] is too painful, and OPEC+ could very well cut production by 500,000 barrels a day next year at the right price.”

Declining global oil demand and oversupply have been the main pressures limiting oil prices this year. Leighton expects this to continue through 2024, with the global market expected to face a surplus of around 1 million barrel per day in the second quarter and around 600,000 b/d for the whole of 2024.

03

UBS

【UBS: The economy is slowing down, but it has not collapsed, all of which means that concerns about the Fed's interest rate hikes no longer exist.】

“The economy is slowing, but not collapsing, all of which means that concerns about Fed rate hikes are gone.” The S&P 500 has risen 12% from its Oct. 27 low to its highest level in 2023, extending its year-to-date gain to 20%. In the bond market, the yield on the benchmark 10-year U.S. bond has now fallen to 4.2% as prices have risen. U.S. government bonds returned 3.44% in November, which recorded the third best monthly performance since 1989, according to UBS.