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Weekly Market Update (November 12, 2023)


US equities went up slightly this week. Global equity fund flows increased from $3bn outflows last week to $8.8bn inflows this week. A government shutdown is still possible if the funding is not extended before the 17 November deadline.

Treasury Auction: The demand for long-dated treasuries is weak, as indicated by the auction results this week. Consumers are expecting the inflation will be at 3.2% over the next 5 to 10 years, according to the consumer sentiment survey by the University of Michigan.

Rate Expectation: 30Y mortgage declined significantly by 0.25% to 7.5%. Mortgage applications for home purchases jumped 2.5%. Market is expecting no more rate hikes by the end of the year and pricing a rate cut by June next year. 92bps cut is priced in by the end of next year.

BoJ: The Governor of the Bank of Japan commented that they have to ensure Japan does not fall into disinflation by monetary easing policy. However, they also said they will avoid creating volatility in bond markets even if they need to hike rates. Markets expect they will unwind the yield curve control in October next year.





S&P 500















*Data as of market close. 5-day change ending on Friday.



Standard Chartered: We expect further uptrend in equities in the near term, driven by the technology-related sectors which are rate sensitive. The recent yield and dollar pullback is supportive for emerging markets. As we are navigating the late-cycle rally, it is suggested to watch for signs of economic slowdown.

Morgan Stanley: Markets debated whether we are in the bull market as the stocks are up in 2023, while we believe we remain in a bear market as the indexes are well below all-time highs. The performance between gold and stocks in the past two years is convincing proof that stocks stopped making progress versus gold, indicating that they are lagging real economic growth and inflation.

Fixed Income

Morgan Stanley: The junk bond spread is widening as the financial conditions have tightened in the last couple of months. The spread differential between bonds rated B and CCC has backed to March’s level during the regional bank crisis. Given the expectation of rising unemployment and slowing growth next year, this can be treated as a warning of trouble ahead.

UBS: The increase in bond yields in the last few months is equivalent to a 75bps rate hike. Thus, the decision to pause makes sense. Fed is aware of overtightening, and will probably not prioritize tighter financial conditions to cool the economy. It could be considered a partial policy pivot.


Goldman Sachs: The conflicts in the Middle East increased the upside risks to inflation. The officials of the Bank of England mentioned that interest rates will stay in restrictive territory. In Europe, the survey indicated that 1-year inflation expectation increased by 0.5% to 4%.

Barclays: In the US, the economic data is resilient in the last months, and a stronger GDP trajectory is expected next year. In the eurozone, a decline in GDP is expected in 23Q4, flat growth in 24Q1 and recovery in 2025.



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