Hot list selection for the week: the probability of non-agricultural "off-the-table" interest rate hikes has greatly increased!

DBGShield BoForeign exchange summarizes the important events of the past week.

The dollar index is set to record this weekRising for the 12th consecutive week。The US index stood at the 107 mark at the beginning of the week for the first time since November last year, but the rally failed to continue, and it began to fall from a 10-month high in the middle of the week。After Friday's non-agricultural data, the US index fell back after a short-term surge。

Spot gold has fallen for nine consecutive trading days.Hit a seven-month intraday lowThe lowest hit this week was $1,810.51 per ounce。After the non-agricultural data, the short-term gold price showed a deep V reversal。

Treasury yields rose across the board this week, with 10-year Treasury yields in midday tradingThe highest rose to 4.887%, setting a new 16-year high.But Wednesday saw its biggest one-day drop in more than a month。30-Year Treasury yieldThe intraday break exceeded 5% for the first time since the financial crisis。

International crude oil prices continue to decline this week。On Wednesday, WTI crude oil fell 5.6% and Brent crude oil fell 5.6%, hitting record highsThe largest one-day decline since September and August 2022。Both oil prices have erased their gains since the end of August。WTI fell as low as 80.63 and Brent crude fell as low as 83.10.。

Non-US currencies areUnder the pressure of a strong dollar, the situation remains sluggish。The Australian dollar hit a new low against the dollar since November 2022, falling for the third consecutive week this week。The dollar hit an important 150-point mark against the yen for the first time since October last year, but then fell sharply by 300 points in the short term, sparking speculation of intervention by the authorities。

[Weekly Events]

1. Non-farm payrolls are off the charts! The probability of the Federal Reserve raising interest rates in December has greatly increased

The US non-farm payroll data in September unexpectedly "broke the table".This is the largest increase since the beginning of this year.Indicates a strong labor market.It may support the Federal Reserve to raise interest rates again。

The data released on Friday revealed that the U.S. non-farm payrolls after the September quarterly adjustmentIncrease 336,000 people,170,000 more than expected, the largest increase since January 2023。In addition, the number of new jobs in July and August was 119,000 higher than before the revision。

The unemployment rate was 3.8%.Same as last month。The average monthly hourly wage rate was 0.2%, slightly lower than expected; the labor force participation rate was 62.8%, unchanged from the previous month。

For the Federal Reserve, the strength of the labor market could keep inflation under upward pressure。After the data is released,The swap market price indicates that the Federal Reserve is more likely to raise interest rates this year, pricing in a delay in the Fed's rate cut from July to September。The increase in the implied yield of contracts linked to the Federal Reserve's policy rate indicates thatThe probability of a 25 basis point rate hike in December is close to 50%.。

On Wednesday, the number of small non-farm ADP jobs unexpectedly cold, recorded 89,000, far less than expected and the smallest increase since January 2021。However, the number of initial and renewed jobless claims in the United States last week was slightly lower than expected。On an unadjusted basis, initial jobless claims fell to their lowest level in a year, highlighting the continued strength of the labor market。

The "small non-farm" data was unexpectedly cold! Has the probability of further interest rate hikes by the Federal Reserve decreased again?

Non-farm payrolls nearly doubled in September than expected! Markets are betting up the ante that the Federal Reserve will be "last plus"

2. Has the surge in U.S. Treasury yields been equivalent to a Federal Reserve interest rate hike?

This week, Federal Reserve officials made a barrage of speeches。The Federal Reserve left interest rates unchanged last month, most policymakers saidIt may be necessary to raise interest rates again before the end of the year。However, the controversy remains significant, with hawks and doves still disagreeing。

Powell said this week that the Federal Reserve's focus is on maintaining a healthy economy and its goal is to achieve a consistently strong labor market.The need to maintain price stability。

Federal Reserve Governor Bowman said it may be appropriate to raise interest rates further and maintain them at restrictive levels for a period of time。If the data suggest that inflation has stalled, or that the return to 2% is too slow,She remains willing to support rate hikes at future meetings。

Cleveland Federal Reserve President Mester also said that if the current economic situation persists,She is likely to support a rate hike at the next meeting and does not expect a rate cut to happen anytime soon。

Federal Reserve Governor Barr was more cautious, saying he agreed with Powell's view that he couldCarefully adjusting interest rates,And thinkInterest rates may have reached or approached sufficiently restrictive levels。

San Francisco Fed President Daley, who is seen as a dove, believes that,The tightening in the U.S. Treasury market has amounted to a rate hike.Provides a reason for subsequent inaction。Atlanta Federal Reserve President Bostic also said,There is no rush to raise interest rates again.But there is no rush to send a premature easing signal or even cut interest rates. The next move is expected to beThere will be a 25 basis point rate cut at the end of next year。

U.S. Treasury Secretary Janet Yellen said the surprising resilience of the U.S. economy has prompted investors to question what the Federal Reserve will do to reduce inflation.But she expressed doubts about whether this would force interest rates to remain high for a long time。At present, the market's bets on the target of the Federal Reserve's November interest rate resolution have reached an unprecedented level, and each fluctuation of 1 basis point is worth about 25 million US dollars。The swap market tied to the Fed meeting date shows a rate hike of about 7 basis points in November, that isThe probability of a 25 basis point rate hike is about 30%.。

This week, the global government bond market continued to sell off, with the yield on the 30-year U.S. Treasury bond rising to 5% for the first time since 2007.。This week alone, the 10-year Treasury yield has surged by nearly 30 basis points to 4.8 percent and is up nearly 100 basis points this year。Nick Timiraos, a Wall Street Journal reporter known as the "New Fed News Agency," wrote that,Soaring Treasury yields threaten the Federal Reserve's soft landing target。

In addition to raising interest rates, the Federal Reserve is also shrinking its balance sheet.Its total balance sheet fell below $8 trillion this week,Down $1 trillion from peak。The 30-year Treasury note has been hit hard by the sell-off over the past two weeks, and the Federal Reserve is the largest holder of these bonds。Fortunately, the Federal Reserve is not actively selling bonds at the moment and is likely to hold them until maturity, so the sell-off will have little impact on it。

The Federal Reserve has a united front, but the dispute over interest rate hikes has not ended, and the new "Eagle King" has been exposed?

The bond market rout sounded the alarm! 30-year U.S. Treasury yields hit 5% for the first time since the financial crisis

"New Fed News Agency": Soaring bond yields are destroying hopes of a soft landing for the economy

The situation is getting more complicated! The Federal Reserve's soft landing vision is being "suppressed" by US debt

The safest asset has collapsed, and the Federal Reserve is the biggest loser!

3. McCarthy became the first speaker to be ousted in history

On October 3, the US House of Representatives passed a resolution to remove McCarthy with 216 votes in favor and 210 votes against。McCarthy became the first House speaker to be ousted in American history。Previously, Congress passed a short-term funding bill supported by McCarthy.Let the government continue to operate until November 17。However, the interim bill does not include demands from the Republican ultraconservatives to slash federal government spending and strengthen border controlsThey accused McCarthy of conceding to Democrats。

Patrick Mchenry, a member of the U.S. House of Representatives, has been appointed as the Speaker pro tempore of the House of Representatives。The House of Representatives is currently in recess for a week.The election of a new speaker could be held next Wednesday.A number of MPs have announced their candidacy。McCarthy says he will no longer run。

Some Republicans in the United States have proposed that Trump run for the US House of Representatives, and Trump has also said that,He can accept to be the Speaker of the House of Representatives,"Until they find a long-term candidate。However, under party rules, the leading Republican frontrunner in the 2024 election is not eligible for the position unless the House amends existing rules。

The first in American history! House Speaker McCarthy was ousted, who would dare to take this "hot potato"?

4. High oil prices start to kill "demand", and bears return?

This week, Saudi Arabia announced that it would continueVoluntary cuts of 1 million barrels per day until the end of December 2023。Russian Deputy Prime Minister Novak also said,Continue current production cuts until the end of the year.Cut crude oil exports by 300,000 barrels a day, and next month will consider whether to deepen voluntary production cuts or increase production。Separately, Russia lifted a ban on diesel exports through port pipelines, lifting most of the restrictions imposed on September 21, but restrictions on gasoline exports remain in place。

Saudi Arabia and Russia have said they will review additional restrictions on a monthly basis。If oil prices rise above $100 a barrel, the discussion could shiftWill Saudi Arabia intervene to prevent excessive market volatility?。Goldman Sachs expects Saudi Arabia to resume supply.To prevent oil prices from going well above $105 a barrel,Avoid affecting consumption。

However, JPMorgan Chase said that as fuel costs squeeze consumer spending,"Demand destruction has begun"。Spurred by the prospect of a prolonged rise in global interest rates, market sentiment has deteriorated.Overriding concerns about actual supply constraints,Technical selling and algorithm-driven traders rushed to leave the market, driving crude oil prices to a full-blown rout this week。

According to records filed by ICE Futures Europe and the U.S. Commodity Futures Trading Commission (CFTC), fund managers became net sellers for the first time in four weeks after buying 155 million barrels of crude oil since August 29。

The high oil prices have obviously affected demand。The latest inventory report from the U.S. Energy Information Administration (EIA) reflectsGasoline demand is unusually lowCrude oil inventories fell for the third consecutive week and inventories at the Cushing hub rose for the first time in eight weeks。Gasoline inventories surged by nearly 6.50 million barrels, the biggest weekly increase since January 2022。

In addition, a Reuters poll shows that while Saudi Arabia and other members of the OPEC + alliance continue to cut production to support oil prices,OPEC oil production rose for the second consecutive month in SeptemberLast month, OPEC's daily output was 27.73 million barrels, an increase of 120,000 barrels from August。Nigeria and Iran saw the largest increases in production, with Iran's output reaching its highest level since 2018。

Saudi Arabia and Russia also increased crude exports last month, adding about 1 million barrels per day combined, although still well below July levels, but also easing increasingly tight global supplies。

JPMorgan analysts pointed out that,The depressing effect of rising oil prices on demand has once again become apparent.Crude oil demand is expected to decline this quarter, causing inventories to increase。After oil prices reached their target of $90 a barrel in September, the bank'sThe year-end target remains at $86 per barrel。

Sudden crash! Crude oil plummeted nearly 6%. What happened?

OPEC + two giants exports rebound! Citi holds high the bearish banner: oil prices will return to $70

The demand disruption has already begun! Saudi Arabia and Russia have just announced that they will extend their production cuts until the end of the year

High oil prices are "killing demand" again!

The yen fell below 150. Did the Japanese authorities intervene?

This Tuesday, the US dollar was trading against the Japanese yenIt briefly rose above 150 for the first time since October last year.Then it plummeted another 300 points,Sparking market speculation about intervention by Japanese authorities。Japan's deputy finance minister and the most senior official in charge of foreign exchange affairs, Makoto Kanda, refused to say whether he had intervened in the US-Japan exchange rate, and market suspicions continued to ferment。Bank of Japan Governor Kazuo Ueda also said he would not comment on currency issues。

Released by the Bank of Japan on ThursdayThe preliminary estimate of the current account balance is in line with expectationsIt may suggest that the authorities did not intervene in the market after the yen fell below 150 against the dollar。Because if the authorities had intervened on Tuesday, government financial flows would have turned very negative。The officials' refusal to speak out may be part of a strategy to keep traders in the dark about the authorities' actions, while strengthening psychological defenses against speculators。

The evidence is here! The Bank of Japan may not have "stepped in" on Tuesday

Unsolved doubts about intervention, Japan playing psychological tactics? Yen bottom line or lower!

6. The US trade deficit has shrunk to its smallest level since 2020

The U.S. trade deficit fell to its smallest in nearly three years in August, reflecting theThe decline in U.S. demand for foreign goods and the increase in merchandise exports。Data show that domestic demand for both consumer goods and capital equipment is weakening。Rapidly rising borrowing costs could further limit purchases of overseas goods。In addition, imports of capital goods, including semiconductors, declined, as did imports of mobile phones, automobiles, and other consumer goods。And with the dollar near a one-year high, U.S. goods and services are more expensive for overseas customersThe recovery in exports may be short-lived。

7. U.S. mortgage interest rates hit their highest level in nearly 23 years

United StatesMortgage rates rose for the fourth consecutive week.The average interest rate on a 30-year fixed-rate loan rose to 7.49 percent from 7.31 percent last week.。U.S. mortgage rates have remained high since they rose above 7% in mid-August.The number of loan applications has dropped to a 28-year low。High interest rates and housing prices are keeping potential buyers out, and homeowners are unwilling to give up previously lower-cost loansThe shortage of housing in the surrounding area is worsening。

The 2023 Nobel Prizes will be announced one after another

2023Nobel Prize in PhysicsAwarded to Pierre Agostini, Ferenc Krause, and Anne Lülier in recognition of the fact that they would produceattosecond light pulseThe experimental method used to study the electronic dynamics of matter。

Nobel Prize in Physiology or MedicineAwarded to Katalin Karikó, senior vice president of pharmaceutical company BioNTech, and Drew Weissman, a professor at the Perelman School of Medicine at the University of Pennsylvania, USA, for their "discovery ofNucleoside base modification,Therefore, it is possible to develop an effectiveCOVID-19 mRNA vaccine”。

Nobel Prize in LiteratureAwarded to Norwegian writer Jon Fosse in recognition of his "innovativeDrama and Prose, speak up for the unspeakable "。

Nobel Prize in ChemistryAwarded to Munji Bavendi, Louis Bruce, and Alexei Yechimov in recognition of their contributions to discovery and synthesisquantum dotThe contributions made in this regard。

A $960 million acquisition would give ExxonMobil 1.20 million barrels per day

According to the Wall Street Journal, citing anonymous sources familiar with the matter, Exxon Mobil is close to a deal to acquire shale oil giant Pioneer Natural Resources for $60 billion。If successful, the two would integrate the two largest fields in the Permian Basin in Texas and New Mexico, making ExxonMobil the largest producer in the basin, producing about 1.20 million barrels a day, more than many OPEC countries。

Blockbuster deal! ExxonMobil may start the era of oligarchs and reshape the US energy industry

10. class A shares after the trial T + 0? Brokers: no relevant action

On the evening of October 5th, online rumors said that the trading hours of Chinese class A shares will be adjusted after the holiday, and limited T + 0 trading will be piloted in some stocks。However, adjusting trading hours and implementing T + 0 must give brokers time to adjust their backstage。The reporter learned from the brokerage that there are no relevant actions at present。

11. Apple CEO cashes out $41 million

According to an October 3 filing with the Securities Exchange Commission (SEC), Apple CEOCookSold 511,000 shares, the after-tax value is about 41 million US dollars (about RMB 299.36 million)。The document shows,CookHe still owns about 3.28 million shares of Apple。The year 2023,CookA rare pay cut of about 40% to $49 million, but the percentage of stock units tied to Apple's performance will increase from 50% to 75%.。