MHMarkets：December 14, 2023,--Fundamental Reminder

16:30 CHF SNB Interest Rate Decision

17:00 EUR France IEA Oil Market Report

20:00 GBP BOE Interest Rate Decision & Monetary Policy Summary

21:15 EUR ECB Interest Rate Decision

21:30 USD Initial Jobless Claims (DEC/09) & USD Retail Sales MoM (NOV) & USD Import Prices MoM (NOV)

21:45 EUR ECB Press Conference

Market Overview

Review of Global Market Trend

On Wednesday, U.S. bond yields fell across the board as a result of the Fed's apparent dovishness, with the 10-year U.S. bond yield narrowly avoiding the 4% mark and eventually closing at 4.024%; the two-year U.S. bond yield, which is more sensitive to the Fed's policy rate, fell by more than 30 basis points during the day to close at 4.429%. The U.S. dollar index dived during the day, falling below the 103 mark and eventually closing down 0.809% at 102.98.

Spot gold in the Fed interest rate resolution announcement straight line up, stand on $2020 per ounce, rose nearly $50 during the day, and finally closed up 2.26% at $2024.26 per ounce; spot silver closed up 4.65% at $23.81 per ounce.

International crude rebounded slightly from 5-month lows as U.S. crude inventories fell more than expected and an attack on a Red Sea tanker sparked concerns about the security of Middle East oil supplies. WTI crude ended up 1.7% at $69.95 per barrel, while Brent crude closed up 1.81% at $74.81 per barrel.

The three major U.S. stock indexes closed collectively higher, with the Dow closing up 1.4% at 37,090, which was a new closing high, the S&P 500 closing up 1.37%, and the Nasdaq closing up 1.38%. Star tech stocks rose, with NFLX.O closing up 3.67% and AAPL.O closing up 1.59% at a new closing high. The Nasdaq China Golden Dragon Index closed up 0.42%, NIU.O closed up 6.12%, ZH.N closed up 5.69% and BZ.N closed up 2.84%.

All major European stock indexes closed lower. Europe's Stoxx 50 closed down 0.14%, Germany's DAX 30 closed down 0.15% and Britain's FTSE 100 closed down 0.08%.

Market Focus

1. The Fed kept interest rates unchanged, recognizing that the economy and inflation have slowed. Dot plot hints at 3 rate cuts next year. Fed Chair Powell: We believe policy rates are at or near their peak and rate cuts are starting to come into view. Swap market pricing Fed to cut rates by more than 140 bps by the end of 2024.

2. U.S. Treasury Secretary Yellen said in the hours before the Fed announced its interest rate resolution that it was natural for the Fed to consider a rate cut as inflation declines.

3. The U.S. PPI in November recorded an annual rate of 0.9%, less than the expected 1%, which was a new low since June this year. November PPI monthly rate recorded 0%, the market expected 0.1%.

4. Britain's October GDP data unexpectedly contracted, and traders fully priced in a 100 basis point rate cut by the Bank of England in 2024.

5. OPEC Monthly Report: continue to maintain next year's oil demand growth of 2.25 million barrels per day of strong forecasts, while the forecast for this year is an increase of 2.46 million barrels per day, unchanged from last month.

6. The week of December 08, U.S. commercial crude oil inventories fell for the second consecutive week, the decline was significantly larger than expected, at 4.26 million barrels. Cushing crude stocks rose for the eighth consecutive week, rising to the highest point since August.

7. U.S. officials said a commercial oil tanker in the Red Sea suffered a missile attack from Houthi-controlled areas. Israeli President Herzog: Houthis have crossed the red line in the Red Sea.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs believes that the Fed will only cut interest rates once in 2024, with a rate cut of 25 basis points】

Goldman Sachs strategist Praveen Korapaty released a new report that the market is expected to the next 12 months, the Fed will cut interest rates by 125 basis points, at least 50 basis points by the end of June next year, but Goldman Sachs Fed rate cuts are expected to be much more conservative, Goldman Sachs believes that in 2024, the Fed will only cut interest rates once, the interest rate cut range of 25 basis points. He even believes that the current financial markets on next year's Fed rate cuts are too “optimistic”, which in turn gives options traders the opportunity to profit from reverse investment - Goldman Sachs strategists recommend selling SOFR 95.25 call options due June 2024, with those betting on the U.S. dollar. Options, and those betting on the Fed to cut interest rates soon to profit from the investment institutions to carry out counterparty transactions.

02

CITIC Securities

【CITIC Securities: the Fed's first interest rate cut point may around the middle of next year】

CITIC Securities research report pointed out that the Fed's December 2023 interest rate meeting continued to keep interest rates unchanged, in line with market expectations. The meeting statement, dot plot and economic forecasts are dovish signals, dot plot shows next year's target interest rate pivot of 4.6%. Compared with the September meeting of the interest rate target level of the next year, economic forecasts continue to improve this year's growth forecasts, slightly lower next year's growth forecasts, at the same time reduce the next three years of inflation forecasts. Powell's speech was generally dovish, mentioning that this meeting discussed the timing of interest rate cuts. We maintain the previous judgment, that is, the Fed is expected to raise interest rates or the end of the current round, the first time to cut interest rates or around the middle of next year. In the short term, the U.S. dollar index and U.S. bond rates are expected to be weak shock, the U.S. stock market or continue to rise, but need to be vigilant about the economic slowdown, the performance of the downward revision of the risk of adjustment.

03

CICC

【CICC: The Fed is starting to turn】

The Fed is starting to turn, says a CICC research note. Early this morning Beijing time, the December FOMC came to an end. Consistent with expectations, the Fed continued to stop raising interest rates, maintaining the benchmark interest rate at 5.25%-5.5%, which is the third consecutive pause in the rate hike after the 25bp rate hike in July, which is also regarded by the market as a de facto halt to the rate hike. The Fed posture than expected more “dove”, not only the dot plot suggests that there may be three rate cuts in 2024, and compared to two weeks ago Powell that the discussion of interest rate cuts is still immature, this time that the discussion of interest rate cuts “gradually into the field of vision,” there are obvious changes. The market was once worried that the previous rush too much, will be the Fed “knock”, but the result is instead the Fed to the market “close”.