Although U.S. economic data continues to be dovish, the rebound in U.S. bonds slowed slightly yesterday, with yields retracing some of Tuesdays trend, rising by about 10 basis points.
Retail sales data in October was close to market expectations, falling 0.1% month-on-month. The previous months value was revised upward, with car and gasoline sales showing weakness; PPI data attracted greater attention. Due to the decline in gasoline prices, PPI experienced the largest decline in 2.5 years. The decline was 0.5% month-on-month, which was far lower than market expectations of a 0.1% increase. The core PPI excluding food, energy and business services increased by 0.1% month-on-month, but the overall PPI still increased by 1.3% year-on-year.
There are similar signs of slowing inflation in the UK, with price pressures in both core and services CPI falling significantly, providing a window for global central banks to shift to easing policies in 2024.
The New York Fed manufacturing index also supports the soft landing narrative. It has rebounded well in the past month, echoing other PMI indexes, showing that the U.S. manufacturing industry may have passed the most difficult period, as interest rates are expected to enter a relatively low level in 2024. Relaxed stage.
In terms of stocks, although Ciscos profits were not as good as expected and Nvidias stock price also fell after Microsoft launched its first self-developed AI chip, the stock price continued to rise as investors remained in bargain hunting mode; in fact, Goldman Sachs research shows that hedge fund holdings of large-cap stocks have now returned to historical highs. The SP 500 index has returned a very respectable 19% this year, while the seven largest stocks have returned a whopping 71% so far this year. %. Although various economic alarm bells are constantly being sounded, the U.S. capital market has been very friendly to buy-and-hold investors this year. Basically, just follow the beta...
Interestingly, at current prices, the implied yields across asset classes are clustered in a similar range for the first time in years, with cash, equities and investment grade bonds all in the 5-6% range, even over 10 years The yield on US Treasury bonds is also about 4.5%, which is not much different. Different assets are now competing fiercely for capital. The chart below clearly illustrates why cash is now a legitimate asset allocation category.
In terms of cryptocurrency, judging from the SEC’s response document to the Hashdex ETF, the decision to approve the ETF has been delayed again. However, the currency price remains stable, with BTC returning to US$37,000 and ETH exceeding US$2,000. The SEC originally had to issue a decision this week. It responded to the application five years ago, but has now responded that it will delay the decision until 2024, which is likely to affect applications from other asset managers as well.
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