SignalPlus Macro Research Report (20231020): The Federal Reserve is dovish and the market environment tends to be bullish
Yesterday, the global fixed income market was still relatively weak, coupled with good U.S. economic data (initial jobless claims -13,000 to 198,000, the lowest since January), U.S. debt was under pressure again, with 10-year and 30-year yields at They rose to more than 5% and 5.10% respectively in early trading. However, as the market expected Powells speech to be consistent with other FOMC members and turn dovish, there was some short covering and tactical buying in the market before the speech.
However, both Chairman Powell’s prepared statement and follow-up remarks seemed to have little substance and were relatively neutral, sticking closely to the data-dependent/wait-and-see narrative; on the one hand, he noted that “core inflation’s 3-month and 6-month Short-term indicators have been below 3% in recent months, and wage growth indicators have gradually declined, and over time will fall to levels consistent with 2% inflation. These comments are clearly seen as leaning towards a dovish stance, but from a hawkish perspective From a political perspective, the chairman also pointed out that a tight job market that continues to show above-trend growth and is difficult to slow down may pose risks to the inflation outlook and may require further tightening. In addition, he does not believe that monetary policy will affect the economy in any way. If there is any fundamental change, it could be that interest rates have not been kept high long enough. Finally, Powell did not deny the view that a rate hike is unlikely at the November meeting, further solidifying the situation as geopolitical tensions continue to develop. Under market expectations, the Fed will remain on hold in November.
Oil prices soared 2% and gold spot prices approached $2,000 as news broke that U.S. warships had shot down missiles and drones coming from Yemen, apparently targeting Israel; while bond supplies are flooding and inflation expectations are high The yield curve continues to steepen as the market realizes that the era of quantitative easing may indeed be over. ) has been rising in recent months.
Under the influence of high interest rates, interest rate-sensitive stocks and consumer goods sectors once again led the stock market decline. Among them, Tesla lowered its profit expectations on the grounds that rising interest rates affected demand, and Musk also admitted that he was uncertain about future prospects, leading to The stock price fell sharply. In addition, private equity giant Blackstone also fell 8% as rising interest rates and tighter credit conditions led to fewer transactions and deteriorating investment returns, while Discover Financials suffered higher loan write-off losses (because of high interest rates) As a result, Zions Bancorp reported losses related to office building loans and its stock price fell 10%. It seems that the problem of rising capital costs has finally begun to be reflected in the real economy.
Cryptocurrency benefited from the rise in gold prices yesterday and performed relatively well. On the regulatory front, the New York Attorney General filed a new lawsuit against Gemini Trust and DCG, accusing them of defrauding customers of up to US$1.1 billion. These companies have worked hard for many years to After moving forward through legal difficulties, it now seems to have taken another step backward.
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