MHMarkets：December 15, 2023,--Fundamental Reminder

09:30 CNY Monthly Residential Sales Prices in 70 Large and Medium-sized Cities

10:00 CNY Total Retail Sales of Consumer Goods YoY (NOV) & CNY Industrial Added Value Above Designated Size YoY (NOV)

17:00 EUR Manufacturing PMI Flash (DEC)

17:30 GBP Manufacturing PMI (DEC) & GBP Services PMI (DEC)

22:15 USD Industrial Production MoM (NOV)

22:45 USD Markit Manufacturing PMI Flash (DEC) & USD Markit Services PMI Flash (DEC)

Market Overview

Review of Global Market Trend

On Thursday, the market continued to understand the Fed's dovish stance, U.S. bond yields continued the downtrend, 10-year U.S. bond yields fell below the 4% mark, and ultimately closed at 3.923%, setting the lowest level since July; more sensitive to the Fed's policy rate of the two-year U.S. bond yields closed at 4.386%.

With the European and British central banks both countered the market's expectations of interest rate cuts, in sharp contrast to the Fed's attitude, the EURUSD and the GBPUSD rose more than 1%. The U.S. dollar index fell as deep as 101.77, which was a new low since Aug. 10, and eventually closed down 1% at 101.95.

Spot gold was supported by U.S. bond yields and the dollar lower, once stood on the $2040 mark, touching a new high of 10 days, and ultimately closed up 2.26% at $2024.26 per ounce; spot silver closed up 4.65% at $23.81 per ounce.

Due to the slightly improved global demand outlook for 2024 and the depreciation of the U.S. dollar, international crude oil continued to rally. WTI crude oil finally closed up 2.54% at $71.78 per barrel; Brent crude oil closed up 2.76% at $76.81 per barrel.

The three major U.S. stock indexes gradually recovered their losses late in the day, with the Dow closing up 0.43%, the Nasdaq up 0.19%, and the S&P 500 up 0.27%. TSLA.O rose 4.9%, ARM.O rose 7.8%, and ADBE.O fell more than 6%. The Nasdaq China Golden Dragon Index closed up 1.1%, with JD.O up 3.7%, NIO.N up nearly 6% and BABA.N up 1.4%.

Major European stock indexes generally closed higher. Europe's Stoxx 50 index closed up 0.2%, Germany's DAX 30 index closed down 0.08%, and Britain's FTSE 100 index closed up 1.33%.

Market Focus

1. The US November retail sales recorded a monthly rate of 0.3%, which was a new high since September this year, and was higher than the market expected -0.1%. The US to December 9 when the number of initial jobless claims recorded 202,000, which was a new low since the week of October 14, and was below market expectations of 220,000 people.

2. Atlanta Fed GDPNow raised U.S. fourth-quarter GDP growth from 1.2% to 2.6%.

3. The Bank of England left its benchmark interest rate unchanged at 5.25%, in line with market expectations. Bank of England Governor Bailey: Can't say interest rates have peaked, and it's too early to start speculating on a rate cut. Traders to reduce the Bank of England rate cut expectations, now fully priced for the first rate cut will be in June next year instead of May, is expected to December 2024 will be cut by 107 basis points.

4. The ECB left its three main interest rates unchanged, in line with market expectations. ECB President Christine Lagarde: should not let down its guard due to falling inflation, no discussion of rate cuts at all. Sources familiar with the matter: the ECB largely agreed that the rate cut will be later than financial markets currently expect.

5. IEA monthly report: 2023 global oil demand growth forecast lowered by 90,000 barrels per day to 2.3 million barrels per day. Global oil demand growth forecast for 2024 was raised by 130,000 barrels per day to 1.1 million barrels per day due to improved GDP outlook.

6. The London Metal Exchange (LME) said that the UK government's new sanctions against Russia may in some cases prevent individuals and entities from withdrawing Russian metals from the institute's warehouses. Concerns pushed palladium up nearly 12% despite no mention of palladium in the UK's published legislation.

7. Japan's Chief Cabinet Secretary Hirokazu Matsuno: submitted his resignation to Japan's Prime Minister Fumio Kishida to avoid delaying government work. But does not intend to resign from the Diet.

8. European Council President Michel: the EU decided to open accession negotiations with Ukraine and Moldova.

9. The U.S. Congress passed the annual defense authorization bill worth $886 billion.

10. US SEC Chairman Gensler declined to say whether he would approve a spot bitcoin ETF. he said the SEC is evaluating 8-12 spot bitcoin ETFs. its reiterated concerns about the lack of adequate regulation of cryptocurrencies.

Institutional Perspective

01

Deutsche Bank

【Deutsche Bank: The Fed seems happy to let the market do what it wants】

Deutsche Bank says the Fed doesn't seem to care how loose financial markets are, they see the progress of inflation coming back down and are happy to publish their forecasts and let the markets do as they please. Tim Baker, the bank's Sydney-based head of macro research, said there was a fairly widespread view that with the rally in bonds and equity markets, the Fed might be concerned that financial conditions were too loose, and might therefore be motivated to take slight steps, if only to prevent financial conditions from eventually undermining anti-inflationary progress. But ultimately there was no response from the Fed Baker added that almost all G10 countries, at least on a per capita basis, are close to recession, and he is not convinced that the U.S. can continue to buck the trend. If the U.S. growth engine stalls in 2024, then stocks will fall and the dollar will offer safe-haven appeal.

02

JP Morgan

【JP Morgan: ECB failed to send enough dovish messages】

Samuel Zief, head of global foreign-exchange strategy at JP Morgan Private Bank, said it had been thought that the ECB was more likely to lead the Fed in the current rate-cutting cycle because the inflation slowdown was accelerating even faster than in the U.S., while economic growth was significantly weaker. But the ECB is not sending a more dovish message than the Fed. The ECB continues to signal that rate hikes are over, but its economic forecasts suggest there is no reason to rush to less restrictive policies. Zief expects core inflation to remain above the bank's 2% target through 2026, while growth is expected to pick up from now on. We ultimately expect both the ECB and the Fed to turn to rate cuts in 2024, but are unsure which central bank will ultimately start cutting rates first.

03

Barclays Bank

【Barclays Economists: It is now expected that the Fed will cut interest rates three times by 25 basis points each time in 2024】

After the Fed's Dec. 13 meeting, Barclays economists adjusted their forecasts for Fed monetary policy, now expecting three 25-basis-point rate cuts next year, and one every other meeting starting in June. Previously, the bank expected the Fed to cut rates only once, in December 2024, said Marc Giannoni and Jonathan Millar, adding that the adjusted forecasts were based on “unexpectedly weak PPI data and its impact on the evolution of PCE inflation, as well as Powell's failure to push back on expectations for a rate cut.”