MHMarkets：November 15, 2023--Fundamental Reminder

TBD The United States hosts the APEC Leaders' Summit

15:00 GBP Inflation Rate MoM (OCT) & GBP Retail Price Index MoM (OCT)

15:45 EUR France Inflation Rate MoM (OCT)

18:00 EUR Industrial Production MoM (SEP)

21:30 USD Retail Sales MoM (OCT) & USD PPI YoY (OCT) & USD PPI MoM (OCT)

23:30 USDEIA Crude Oil Stocks Change (NOV/10)

MHMarkets Market Overview

Review of Global Market Trend

On Tuesday, the Fed's interest rate rise was boosted by weaker-than-expected inflation data in the U.S. The dollar index fell to 104 for the first time since Sept. 1 and was last down 1.523% at 104.07. Non-us currencies partied together, with EUR/USD rising above 1.08, its highest since September 4th. GBP/USD moved up to 1.25, a 2-month high. The dollar fell as much as 1% against the yen during the day. NZD/USD rose to 0.60 for the first time since November 6, gaining more than 2% on the day. The Australian dollar stood above 0.65 against the US dollar, its highest since November 7 and up more than 2% on the day.

Treasury yields tumbled across the board, down about 20 basis points overall. The yield on the 10-year Treasury note closed at 4.453%; The yield on the two-year Treasury note, which is more sensitive to the Fed's policy rate, fell even deeper to close at 4.836%.

Spot gold continued to rally after the release of the cooler-than-expected CPI data, touching the 1,970 mark, before settling up 0.89% at $1,963.18 an ounce, its best daily performance since Oct. 27. Spot silver recovered 23 points to end up 3.51% at $23.09 an ounce.

International oil prices closed slightly lower on the back of no apparent escalation of tensions in the Middle East and uncertainty about U.S. oil inventories. WTI crude settled down 0.41% at $78.16 per barrel; Brent crude settled down 0.29% at $82.39 a barrel.

The three major U.S. stock indexes closed up, with the Dow Jones Industrial Average up 1.43%, the Nasdaq up 2.37% and the S&P 500 up 1.9%. Tesla (TSLA.O) rose 6%, Nvidia (NVDA.O) rose 2% and Microsoft (MSFT.O) rose nearly 1% to close at a record high in market value. Financial stocks did well, with Bank of America (BAC.N) up more than 5% and Goldman Sachs (GS.N) up 3.5%. The Nasdaq China Golden Dragon Index closed up 2.2%, with shares of Xpeng Motor (XPEV.N) up more than 8%, JD.com (JD.O) up 3% and Alibaba (BABA.N) up nearly 2%.

Major European stock indexes were higher across the board. Europe's Stoxx 50 index closed up 1.41%, Germany's DAX30 index rose 1.76%, Britain's FTSE 100 index rose 0.2%, France's CAC40 index rose 1.39%, Spain's IBEX35 index rose 1.71% and Italy's FTSE MIB index rose 1.45%.

Market Focus

1. Both the headline CPI and core CPI in the US were lower than expected, with the unseasonally adjusted CPI annual rate of 3.2% and the core CPI monthly rate of 0.2% in October. Interest-rate futures are pricing in a complete end to the Fed's rate-hike cycle, with expectations of a cumulative 100 basis point rate cut by the end of next year, with the first cut as early as May.

2, the NFIB Small Business Confidence Index in the US decreased by 0.1 points to 90.7 in October, a five-month low, mainly reflecting a deterioration in earnings due to weaker sales and higher costs. Nearly a third of small businesses saw their net earnings fall in the past three months, the largest proportion in more than a year. The deterioration suggests consumer demand may be retreating after solid growth in the third quarter.

3. Chicago Fed President Goolsbee: Inflation progress continues, but there is still a way to go. New Fed News Agency: Rate hike cycle may be over, the future focus on revising statement guidance. Ahead of CPI data, Fed Vice Chair Jefferson: Uncertainty about inflation persistence may require a stronger policy response than would otherwise be the case.

4. Market news: The US House of Representatives has enough votes to pass a temporary funding bill, and voting is continuing.

5. IEA Monthly Report: Raised global oil demand growth Forecast to 2.4 MB/d in 2023 (from 2.3 MB/d previously) and 930,000 MB/d in 2024 (from 880,000 MB/d previously). The oil market will be in short supply by the end of the year and could be in oversupply in early 2024.

6, about 3.2 million barrels a day were shipped from Russian ports in the week ended Nov. 12, down 40,000 barrels from the previous week but still 700,000 barrels above August levels, according to tanker tracker data. The less volatile four-week average fell to 3.4 million barrels a day, down about 80,000 barrels from the previous week. That was the lowest level in four weeks, but still more than 500,000 barrels a day above flows in the period ended August 20th.

7. Iraqi Kurdish regional media: Iraq's oil minister says he is optimistic that a deal with the Kurdish regional government will be reached in the coming days to resume oil exports.

8. Israeli-palestinian conflict - The Israeli army says it has captured several Hamas positions in parts of Gaza City, in case of a long: ground operations include southern Gaza.

9. U.S. officials: U.S. extends 120-day waiver allowing Iraq to pay Iran for electricity

10, Eurozone GDP shrank in Q3 and employment rose.

Institutional Perspective

01

Bank of America

【Bank of America：Economists no longer expect the Fed to raise rates again】

Bank of America economists no longer expect the Fed to raise interest rates again after the weaker-than-expected October consumer price index released Tuesday. “We now believe the rate-hike cycle is over,” the team led by Stephen Juneau said in a note, noting that “so does the market.” The October CPI data was “undoubtedly good news” for the Fed, although “monthly inflation data can be very choppy.” Bank of America still expects the Fed to start cutting rates in June.

02

CICC

【CICC：Undue expectations of monetary easing in the United States should not be made for the first rate cut or in September next year】

Cicc noted that the US CPI for October was 3.2% yoy and the core CPI was 4.0% yoy, which were lower than the market and our expectations. Although health insurance prices have rebounded for statistical reasons, weak growth in prices for gasoline, rent, used cars and hotels has kept overall inflation down. In the short term, slowing inflation means that the Federal Reserve has less need to raise interest rates further, hopes of a soft landing for the US economy have risen, investors' risk appetite has improved, and assets with more adjustment in the early stage are expected to rebound. However, it is not appropriate to expect too much monetary easing in the US. Our baseline scenario is that the Fed keeps interest rates at the current level in the first half of next year and turns to cutting rates in the second half, with the first cut likely in September next year.

03

CITIC Securities

【CITIC Securities：Us inflation stickiness shows signs of weakening this round of interest rate hikes may be over】

CITICSecurities Research pointed out that US CPI growth slowed to 0.0% month-on-month in October, while core CPI growth was 0.2% month-on-month, both slightly lower than expected. The decline in month-on-month core inflation in the US was driven by a slowdown in month-on-month core services inflation, with market concerns about inflation stickiness fading. The Fed is expected to have completed this round of rate hikes, and the 10-year Treasury rate may weaken in the short term, but will still run above 4%.