MHMarkets：October 24, 2023--Fundamental Reminder

14:00 GBP Unemployment Rate(SEP) & GBP Claimant Count Change (SEP)

16:00 EURManufacturing PMI Flash (OCT)

16:00 RBA Chairman Block will attend the Commonwealth Bank of Australia's Global Markets conference following the release of hawkish minutes from the RBA. Investors will be on the lookout for comments from Block on the RBA's next rate-setting meeting.

21:45 USD Markit Manufacturing PMI Flash (OCT)& USD Markit ServicesPMI Flash (OCT)

22:00 USD Richmond Fed Manufacturing Index (OCT)

MHMarkets Market Overview

Review of Global Market Trend

The dollar index plunged during U.S. trading on Monday, falling below the 106 mark and hitting an intraday low of 105.51 before closing down 0.52% at 105.60. U.S. bond yields rose and then fell, with the 10-year yield hitting an intraday high of 5.021% but failing to hold above 5% and accelerating losses in premarket trading to end at 4.848%. The yield on the two-year Treasury note closed at 5.047%.

Spot gold's advance stalled as traders awaited further developments in the Middle East conflict and U.S. economic data, falling as low as $1,964.43 before recovering but remaining stuck at the $1,980 mark to end down 0.43% at $1,972.86 an ounce. Spot silver fell below the $23 mark and ended down 1.65% at $22.98 an ounce.

So the former Hamas released two American hostages from Gaza, leading traders to believe that the Israeli-Palestinian conflict could ease before it spreads to other parts of the Middle East and disrupts oil supplies. Crude oil retreated sharply, with WTI crude falling as much as 3% to an intraday low of $85.32 before ending down 2.51% at $86.06 a barrel. Brent crude fell below the $90 mark before recovering to end down 2.03% at $90.45 a barrel.

The Dow Jones Industrial Average closed down 0.58%, the Nasdaq rose 0.27% and the S&P 500 fell 0.17%. The Nasdaq China Golden Dragon Index closed up 0.9%, ending a four-day losing streak, while Ctrip closed up more than 5%, Xpeng Motor rose nearly 4% and JD.com rose nearly 2%. Nvidia, which is reported to use Arm architecture to design cpus, closed up 3.8% and 4.9% respectively. Intel fell nearly 3%.

Major European stock indexes were mixed, with Germany's DAX30 closing up 0.02%, the U.K. 's FTSE 100 down 0.37% and the Euro Stoxx 50 up 0.42%.

Market Focus

1. Blackrock's proposed iShares Spot Bitcoin ETF has been filed with the Securities Depository and Clearing Corporation (DTCC), suggesting the fund could be approved by the Securities and Exchange Commission (SEC), according to ETF analyst Eric Balchunas, Cointelegraph reported. Bitcoin rose above the $34,000 mark on the news.

2, traders reduce rate hike bets on the BOE, with a 50% probability of a final 25 basis-point hike.

3. Turkish President Recep Tayyip Erdogan submitted Sweden's bid to join NATO to parliament for approval.

4. U.S. hedge fund manager Bill Ackman said he covered his short position in U.S. Treasurys and that global risk was too high to continue shorting bonds at current levels of long-term interest rates. Gross, the debt king, said he was buying futures tied to the secured overnight funding rate, or SOFR, and predicted a recession in the fourth quarter.

Institutional Perspective

01

Pershing Square Capital Management

【Pershing Capital：There's too much risk in the world for us to stay short selling at current long-term interest rates. The economy is slowing more rapidly than recent data suggest】

Bets on Treasurys by Ackman and others have proven to be profitable bets in recent years. The Bloomberg Global Agg Treasuries index is down 4.8% so far this year, after falling 17% in 2022. The index is heading for an unprecedented third year of losses.

02

UBS

【UBS：While rising interest rates typically make stocks less attractive relative to Treasurys, the gap between the S&P 500's yield and the 10-year rate (the equity risk premium) doesn't look worrisome.】

While history shows that rates above about 6.5% on the 10-year note tend to lead to lower valuations, it's hard to know whether that “tipping point” is still in effect, Lefkowitz said. He noted that this “tipping point” may have been reduced, perhaps because the underlying nominal growth rate of gross domestic product was lower than in the past. The main risk for stocks is whether rising interest rates lead to a significant economic slowdown.

03

BarclaysBank

【BarclaysBank：The risk-reward favors Canadian dollar long exposure as market pricing does not reflect the risk of hawkish holding or even a 25 basis-point rate hike.】

“Last week's consumer price index may have been a little softer, but it did little to improve the backdrop of core inflation stickiness,” Barclays said. Further evidence of “hawkishness” on the part of the Bank of Canada includes that wage growth remains above the target consensus and has strengthened recently, and according to the Bank of Canada's latest survey, firms' pricing behaviour has not yet normalised.