SignalPlus Macro Research Report (20231018): U.S. inflation is back, and macro policies may be tightened
Market risk sentiment has gone back and forth. After a strong recovery on Monday, the market changed the script again yesterday. Some U.S. data showed signs of re-accelerating inflation. Concerns about inflation and tightening policies resurfaced, pushing up the overall U.S. bond yield curve. Additionally, a report from Bloomberg stated thatThe Bank of Japan may consider raising its inflation forecast for 2023 and 2024 at the next central bank meeting (October 31), sending the 10-year JGB yield to a 10-year high, and the strong German ZEW economic index results and the weakness of the 2-year German government bond auction also caused the German short-term yield to rise by 9.5 basis points that day.
Subsequently, the retail sales data released in the United States also exceeded expectations, with a month-on-month growth of 0.7%, much higher than the expected 0.3%. The performance of the control group was even more outstanding, with a month-on-month growth of 0.6% (vs. the expected 0.1%). The strong sales data are reflected in Retail sales of all categories, except automobiles and gasoline, increased by 0.6% in September, and the previous value for August was also revised upward. In addition, actual consumer spending in the third quarter is expected to increase by 4% quarter-on-quarter, giving next weeks third-quarter GDP The forecast adds to the upside risks.
After the release of retail sales data, the forecast of the Atlanta Feds GDPNow model was raised to 5.4%. The 2-year yield rose above the high on May 21 and approached 5.20%. As the overall U.S. Treasury yield curve rose by 15 basis points (continuous (5-day fluctuation of more than 10 basis points), long positions in fixed income were fully unwound; adding fuel to the fire, the Feds Barkin broke the (dovish) stance, saying that the Fed tried to overcorrect and undercorrect in terms of policy We need to see further evidence that weak demand is affecting inflation. Although he favors keeping interest rates unchanged for the time being, the Fed has not yet reached its target in fighting inflation; supported by strong economic data, in December The probability of a rate hike has risen back to 36%, and even the probability of a January 2024 rate hike has increased slightly to just over 10%. Powells speech at the Economic Club of New York tomorrow is now even more important. It will be the first time the Fed has gone silent. The last official talk before the period.
Higher interest rates overshadowed the stock market, which initially fell after the retail sales data was released, followed by a strong intraday rally of 1.3% (is it good news or bad news? Or is the good news now actually good news?), before continuing to collapse in bonds. Under the circumstances, the stock market closed slightly lower, with bank stocks performing better. Bank of Americas profits easily exceeded market expectations. However, on the other hand, affected by the news that the United States restricted the export of some Nvidia chips to China, Nvidias stock price fell 4.5%. And dragged down the entire technology sector.
In terms of cryptocurrency, BTC price stayed above $28,000, outperforming almost all other currencies. Apart from the expectation of spot ETF approval, the industry still lacks other good news or expectations; in terms of regulation, the Australian government finally The long-awaited regulatory framework was released at the Australian Financial Review Crypto Summit on Monday, announcing that cryptocurrency exchanges will need to obtain a financial services license from AUSTRAC to continue operating, similar to the strict requirements announced earlier by the Hong Kong Securities and Futures Commission. Most of the 400 small exchanges will be forced to merge with larger rivals to meet higher balance sheet and regulatory reporting requirements.
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