MHMarkets：November 01, 2023--Fundamental Reminder

09:45 CNY Caixin Manufacturing PMI (OCT)

17:30 GBP Manufacturing PMI (OCT)

20:15USD ADP Employment Change (OCT)

20:30 The US Treasury's announcement of its plans to issue debt over the next three months will influence the direction of the entire bond market. The Treasury on Monday lowered its forecast for net borrowing in the October-December quarter to $776 billion.

21:45 USD Marki Manufacturing PMI Final (OCT)

22:00 USD ISM Manufacturing PMI (OCT)

22:00 JOLTs Job Openings (SEP)

22:30 USD EIA Crude Oil Stocks Change (OCT/27)& USD EIA Oklahoma Cushing Crude Oil Stocks Change (OCT/27) & USD EIA Strategic Petroleum Reserves Change (OCT/27)

The next day at 02:00, the Fed announces its interest rates decision.

The next day at 02:30, Fed Chairman Powell holds a news conference.

U.S. President Joe Biden will deliver an economic policy speech at 4:15 a.m. Beijing time on Thursday, closely following the Fed decision.

MHMarkets Market Overview

Review of Global Market Trend

On Tuesday (October 31), a series of US economic data reinforced market expectations that the Federal Reserve will maintain higher interest rates for longer, while eurozone inflation data continued to cool and third-quarter GDP shrank quarter-on-quarter, the dollar regained momentum, closing up 0.54% at 106.72, extending a three-month winning streak from August to October. The yen exchange rate plunged through the 151 mark again, as the Bank of Japan's YCC policy adjustment fell short of market expectations. EUR/USD again lost 1.06, close to erasing monthly gains.

The yield on the two-year Treasury note, which is more sensitive to monetary policy, rose to 5.08%, as markets bet that the Fed would hold off on raising rates but maintain its hawkish language in the early hours of Thursday. The 10-year Treasury yield moved in a V-shape throughout the day, falling to 4.80% in the pre-market before turning higher to close at 4.93%, still below the 5% mark. Investors are eyeing the size and duration mix of U.S. debt auctions the Treasury Department will announce late Wednesday.

A stronger dollar weighed on gold prices. Spot gold stood above the psychological $2,000 mark at the start of the session, but fell nearly 1% to break the $1,980 mark and closed down 0.62% at $1,983.9 an ounce. Spot silver fell as much as more than 2% and below $23 before closing down 1.98% at $22.85 an ounce. New York gold futures rose more than 6.8% in October, while silver futures rose more than 2.2%.

Crude's war premium continues to wane and signs of demand shortfalls have emerged in recent days. WTI crude oil intraday below the $80 mark, closed down 1.49% at $81.31 a barrel; Brent crude settled down 1.24% at $85.49 a barrel. International crude oil futures fell more than 10% in October.

U.S. stocks opened lower and closed higher, with the Dow up 0.38%, the Nasdaq up 0.48% and the S&P 500 up 0.62%. The Nasdaq China Golden Dragon Index closed down 1.69%, with shares of Wei Xiaoli, Bilibili (BILI.O) and iQiyi (IQI.O) all down more than 3% and Alibaba (BABA.N) down 0.77%. Nvidia (NVDA.O) closed down nearly 1%, while AMD (AMD.O) and Intel both rose more than 2%.

European stocks broadly rose on Tuesday, with sentiment buoyed by a cooling rise in bond yields and bright spots in corporate earnings reports. Germany's DAX30 closed up 0.62%, Britain's FTSE 100 closed down 0.10%, France's CAC40 closed up 0.87%, Europe's Stoxx 50 index rose 0.82%, Spain's IBEX35 index rose 0.06% and Italy's FTSE MIB index rose 1.47%. The benchmark index still posted its third straight monthly decline for the month.

Market Focus

1. The US labor cost index posted a quarterly rate of 1.1% in the third quarter, higher than expected and the previous value (1.00%), indicating an unexpected acceleration in US employment cost growth in the third quarter, adding to concerns that a strong labor market could push inflation above target. Separately, the Conference Board's consumer confidence index fell for the third straight month. The S&P Case-Shiller U.S. home price Index rose for the seventh month in a row to a new record in August, while the Federal Housing Finance Agency's home price index accelerated for the third month in a row.

2. Us API crude oil inventories rose by 1.347 million barrels in the week ended October 27th, compared with expectations of a 1.601 million increase and a 2.668 million decrease last.

3. The Bank of Japan kept its ultra-loose policy unchanged, with the 1% yield becoming the reference ceiling, scrapping its daily fixed-rate bond purchases and raising its inflation forecast. Kazuo Ueda, Bank of Japan GOVERNOR: I don't think yields will rise much above 1%.

4. Japan's Foreign Ministry said it didn't intervene in the foreign-exchange market in October. Junichi Suzuki, Finance Minister: Monetary policy should be decided by the Bank of Japan.

5. The preliminary annual CPI rate in the Euro Area in October was 2.9%, the lowest since July 2021. The reading is likely to cement the view that the European Central Bank is done raising interest rates. The slump in Germany has proved to be the real drag on eurozone GDP in the third quarter, after a preliminary estimate of 0.1% annualised growth came in below expectations.

6. ECB Vice President Guindos: The ECB expects inflation to continue to slow in the coming months. ECB Governing Council Stournaras: Interest rate cuts will be considered if inflation continues to fall and stabilizes below the 3% threshold in mid-2024.

7. The Israeli-Palestinian conflict has killed more than 10,000 people on both sides. Heavy fighting broke out between the IDF and Hamas deep inside Gaza. The United States is reaching out to Hamas through Qatar. Iran's foreign minister has met the Hamas leader Ismail Haniyeh in Doha. The Bolivian government announced it was breaking ties with the Israeli government. A Pentagon spokesman said the U.S. would deploy 300 troops from home to the region, but they would not travel to Israel. Standard & Poor's cut outlook for Israel's four largest banks.

8. Reuters poll: Opec's oil output rose 180,000 barrels a day in October from September to 27.9 million barrels a day, mainly driven by Nigeria, Angola, Iran and Iraq.

9. Russian Ministry of Energy: Russia's share of the global LNG market may reach 30% by 2035.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：The U.S. government is expected to avoid a shutdown this year but remains at risk early next year】

In an analysis published Monday, Goldman Sachs predicted that a government shutdown before the end of this year is unlikely, given the likelihood that U.S. lawmakers will again opt for a short-term funding bill, though a shutdown is still possible early next year. As recently as last week, Goldman Sachs projected a two - to three-week government shutdown this quarter, with the Nov. 17 expiration of a stopgap funding bill.

Goldman Sachs now notes that geopolitical tensions such as the Israeli-Palestinian conflict and recent U.S. airstrikes in Syria will make Congress less likely to allow a government shutdown because a shutdown would affect the military; In addition, the election of Mike Johnson as speaker of the House after weeks of infighting has made a shutdown less likely.

02

Bank of America

【Bank of America：UK inflation expectations may have unanchored】

“Longer-term inflation expectations in the U.K. appear to have become slightly unanchored relative to the BOE's 2% target,” Bank of America analysts said in a note. Unlike other major economies, markets do not expect the BOE to hit its inflation target over the medium term, they said.

“Many of our clients feel that the BOE is behind the curve and not doing enough to stabilise expectations.” Some unanchoring of inflation expectations could mean the boe will have to do more to bring inflation back to target, Bank of Americasaid.

03

TD Securities

【TD Securities：Canadian GDP data show that the effect of interest rate hikes will decline in the third and fourth quarters in line with a soft landing】

Canada's GDP was unchanged for the second straight month in August, providing more evidence to the Bank of Canada that higher interest rates are slowing demand and keeping third-quarter growth well below the central bank's 0.8% expectation, according to strategists at TD Securities. That should add some patience to the BOC, they argue, though policy makers still need to see more evidence that weaker growth is slowing inflation before writing off the possibility of further rate increases.

TD Securities expects the economy to shrink 0.2% in the third quarter and 0.1% in the fourth, which would be consistent with the Canadian economy achieving a soft landing, especially as the labor market remains tight.