【True Zoom Finance】Three Federal Reserve officials called for slowing the pace of interest rate cuts; Goldman Sachs predicts U.S. stock returns over the next decade will be below long-term averages.
Goldman Sachs strategists said that the era of the S&P 500's decade-long surge is over, and it will face competition from assets like U.S. Treasury bonds in the next 10 years, with an annualized nominal total return rate of just slightly above 3%.
Overnight Highlights
Most U.S. stocks fell, with the Dow Jones and S&P 500 closing lower on Monday, retreating from the record highs set last Friday and ending a six-week winning streak, while the Nasdaq rose. The U.S. dollar index climbed as U.S. Treasury yields rose, supported by a series of robust U.S. economic data suggesting the Federal Reserve can afford to be patient with rate cuts. Gold was nearly flat as higher U.S. Treasury yields and a stronger dollar offset support from increased uncertainty around the U.S. election and the Middle East conflict. Oil prices rose on concerns over regional supply due to expectations of Israeli retaliation against Iran.
International News
The President of the Federal Reserve Bank of Dallas stated that market liquidity remains very ample, and due to economic uncertainty, rate cuts should proceed at a slow pace.
The President of the Federal Reserve Bank of Kansas City, Schmid, said he supports "careful and deliberate" rate cuts as inflation moves toward the Fed's 2% target and the labor market normalizes.
The President of the Federal Reserve Bank of Minneapolis, Kashkari, predicted "moderate" rate cuts in the coming quarters but noted that a sharp deterioration in the labor market could prompt him to advocate for faster cuts.
Morgan Stanley advised investors to maintain a neutral stance on U.S. Treasuries ahead of the November 5 election, saying the market is unlikely to see a sell-off as severe as in 2016 when Republicans won both houses of Congress.
Goldman Sachs strategists reiterated that the S&P 500's decade-long surge is ending, with competition from assets like U.S. Treasuries likely to limit annualized nominal total returns to just over 3% in the next 10 years.
European Central Bank Governing Council member Kazimir said the ECB will remain flexible heading into its final 2024 meeting, noting that inflation decline is "on solid ground" and further rate cuts are possible. See: [Market Review] ECB Cuts Rates as Expected—What’s Next for the Euro?
The International Energy Agency (IEA) stated that global oil demand growth will continue to weaken due to China's economic slowdown and the rapid adoption of electric vehicles.
Greater China News
India announced the end of a four-year border standoff with China, marking a significant step toward easing tensions and paving the way for a potential meeting between the two leaders at this week's BRICS summit.
Based on calculations from Chinese customs and Russian economic ministry data, China is expected to replace Europe as the largest market for Russian pipeline gas this year.
The People's Bank of China announced that it conducted its first securities, fund, and insurance company swap facility operation on October 21, with 20 institutions participating in the bidding.
According to information published on a U.S. government website, rules banning certain U.S. investments in China's artificial intelligence (AI) sector are undergoing final review, indicating the restrictions are imminent.
$PING AN(02318.HK) reported a 36% profit increase in the first nine months of the year, as rising stock markets boosted investment returns for China's second-largest insurer by market value.
Commodities & Forex Markets
The U.S. dollar rose alongside Treasury yields, while the yen fell below the 150 mark, heading for its worst performance in over two weeks.
Crude oil rebounded after last week's 8% drop, as China took further steps to stimulate its economy and traders focused on supply risks from Middle East tensions.
Earnings & Economic Data Focus
Canada’s central bank interest rate decision through October 23 (forecast: 3.75%, previous: 4.25%)
October 22, 2024
Author: Terry Chow
Source: Goldhorse Capital Extramile
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