Some key factors had driven the markets’ intense rebound last week. First, Cooler-than-expected US CPI data strengthens bets for a Fed slowdown on rate hikes. Second, China’s reopening hopes loom with the country further relaxing its quarantine policy on inbound travellers. The third is a potential Republican win in the House or Senate for the US midterm election. Notably, the riskiest equity markets, the tech-heavy index, Nasdaq, and the Chinese stock barometer, Hang Seng Index, rose the most weekly in such a relief rally. But of course, the major crypto player, FTX’s fall, also sparked concerns about the digital token’s regulatory issues, which deepened these coins’ losses.
Apart from the above three mainstream stories, a slew of major data will continue to offer clues for the global economic trajectory, which shapes future markets’ trends. The last US mega-cap tech company, Nvidia earnings will be also in the spotlight. Plus, the G20 meetings will gather all the world-influential leaders to sit down and talk about confrontational issues among countries, where US President Joe Biden will meet Chinese President Xi in person for the first time as President.Click to enlarge the table
What are we watching?
- US bond yields fall: The US bond yields sharply declined amid the light inflation data last week, with the yield on the 10-year note falling to 3.81% from the week-high of 4.15%, which caused an intense relief rally on Wall Street. See bonds' movements
- The US dollar slips to a 3-month low: The US dollar index had its biggest two-day decline since 2009 amid the sharp drop in bond yields, which has also contributed to the dramatic drop of 5.7% in USD/JPY. Despite a broad equity markets rally, both swift retreat in the US dollar and the bond yields may signal that the inflationary issue may soon become a deflationary threat to the world economy. Trade US dollar index
- A jump in metal prices: Along with a softened US dollar, China’s relaxing covid curbs continued to boost commodity prices on Friday, typically in Gold and Copper, up 5.7% and 8%, respectively. Gold reversed a multi-month downtrend since March from a technical perspective. Check on gold's trend
- Chinese markets continue the rebounding frenzy: Hong Kong markets continued to bounce from their 13-year lows as a quit to Covid-zero policy may not be avoidable, though authorities’ determination to fight the expanding disease. Trade Hong Kong markets
- Cryptocurrencies rout: The FTX’s bankruptcy deepens Cryptocurrencies’ losses, with Bitcoin staying below 17,000 over the weekend, as the famous crypto exchange was facing the US SEC’s investigation regarding its conduct in clients’ funds, which may cause looping effects to other parties. See Cryptocurrencies' movements
Economic Calendar (14 Nov – 18 Nov)Click to enlarge the table