【True Flame Finance】IMF lowers economic outlook; Chinese government think tank calls for the establishment of a stock market stabilization fund.

The International Monetary Fund (IMF) has downgraded its global and Chinese economic outlook, warning that risks such as war and trade protectionism will intensify, and the U.S. election will bring high uncertainty to fragile financial markets.

Overnight Highlights

· U.S. stocks closed little changed on Tuesday, but the Nasdaq edged higher as investors closely watched U.S. Treasury yields and awaited more earnings reports to assess the health of American companies. The dollar hit a two-and-a-half-month high, extending its recent rally, as markets expect the Federal Reserve to slow the pace of rate cuts while investors adjust positions ahead of the tight U.S. presidential election. Oil prices rose for a second consecutive session as traders downplayed hopes for a Middle East ceasefire and focused on tightening global supply-demand balances. Gold climbed 1% to a record high as uncertainty around the U.S. election and the Middle East war spurred safe-haven demand, coupled with expectations of further monetary easing amplifying the rally.

International News

· The IMF has downgraded its global and Chinese economic outlook, warning that risks such as war and trade protectionism will intensify, and the U.S. election will bring high uncertainty to fragile financial markets.

· European Central Bank President Christine Lagarde said the direction of rate cuts is clear, but the pace remains to be decided, leaving open the possibility of more aggressive action.

· The decline in U.S. Treasuries since the Fed's September rate cut is comparable to the Greenspan era in 1995, reflecting traders' expectations of a soft landing for the economy.

· JPMorgan has a starkly different view from Goldman Sachs on the U.S. stock market's trajectory over the next decade, forecasting large-cap stocks to deliver annualized returns of 6.7% over the next 10-15 years.

· As U.S. Secretary of State Antony Blinken arrives in the Middle East, clashes between Israel and Hezbollah continue. Iran's foreign minister said it is closely monitoring U.S. bases in the region.

· The latest Reuters/Ipsos poll shows U.S. Democratic Vice President Kamala Harris leading Republican former President Donald Trump by a narrow margin of 46% to 43%.

· McDonald's (MCD.US) plunged more than 10% in after-hours trading after the U.S. CDC linked one of its burgers to an E. coli outbreak that has sickened 49 people and killed one.

Greater China News

· The IMF expects China's GDP growth this year to fall short of the 5% target, with its chief economist saying the stimulus measures announced by the People's Bank of China last month are insufficient to spur significant growth.

· According to The Paper, the Chinese Academy of Social Sciences' Institute of Finance has called on authorities to issue 2 trillion yuan in special bonds to support the establishment of a stock market stabilization fund.

· Zhu Haibin, chief China economist at JPMorgan, said Beijing's recent policy measures are more aimed at mitigating risks than providing broad stimulus in the short term, and the policy shift is not a 180-degree turn.

· Data from China Central Depository & Clearing Co. shows foreign institutions sold over 100 billion yuan of Chinese government bonds in September, a record high.

· China exported more than 60,000 electric vehicles to the EU in September, with shipments jumping to the second-highest level on record. The EU's plan to impose additional tariffs on Chinese-made EVs could take effect by the end of this month.

· Bloomberg: Huawei's latest AI processor was found to use TSMC chips, but TSMC claims it did not supply them and has communicated with the U.S. Commerce Department on the matter.

Commodities & Forex Markets

· After several ECB officials made dovish comments, currency traders increased bets on rate cuts, sending the euro below $1.08 for the first time since early August. See: [Market Review] ECB Cuts Rates as Expected—What’s Next for the Euro?

· Crude oil rose as traders tracked escalating tensions between Israel and Iran, with attacks continuing despite U.S. efforts to broker a ceasefire.

· Gold hit another record high amid geopolitical risks and U.S. election uncertainty, while silver extended gains for a sixth day. See: [Market Review] Trump Reiterates Trade Protectionism, Trump Trade Heats Up

Earnings & Economic Data Focus

· U.S. EIA Crude Oil Inventories (week ending Oct. 18) (consensus: 11.8K, prior: -219.1K)

Author: Terry Chow

Source: Goldhorse Capital Extramile