September 18 Financial Breakfast: US retail sales unexpectedly rise, the dollar rises, gold is under pressure, and Lebanon vows revenge after pager explosion

Wednesday (September 18) Financial Breakfast includes important fundamental news, precious metals/crude oil/foreign exchange/commodities/stock market/bond market, international news, domestic news, institutional views, today's important financial data and financial events. Data on Tuesday showed that US retail sales rose unexpectedly in August, the economic foundation remained solid, the US dollar rose, gold was under pressure, and US bond yields rose. The pager explosion in Lebanon killed 9 people and injured about 2,800 people. Hezbollah vowed to retaliate.

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Overview of major global markets

1. Precious metals

The US dollar and US bond yields rose. On Tuesday, spot gold fluctuated downward and finally closed down 0.5% at $2,569.58/ounce. Spot silver fluctuated in a range and finally closed down 0.12% at $30.68/ounce.

Adam Hamilton, founder of financial consulting firm Zeal Intelligence, warned that the risk of gold correction has increased. As the main short-term driver, speculators' gold futures positions have been over-expanded. Goldman Sachs said that if the Federal Reserve cuts interest rates by 25 basis points this week, gold prices may face a slight correction in the short term.

The pager explosion in Lebanon killed 9 people and injured about 2,800 people. Hezbollah vowed to retaliate. The tension in the Middle East is at risk of increasing, and gold may be further boosted in the future.

2. Crude oil

International oil prices continued to rebound on Tuesday. WTI crude oil fell to an intraday low of $68.50, and then quickly rebounded, eventually closing up 0.8% at $69.91 per barrel; Brent crude oil closed up 0.89% at $73.17 per barrel.

Due to the hurricane, 6% of oil and 10% of natural gas production in the Gulf of Mexico in the United States were shut down, which is expected to continue to boost oil prices in the short term.

3. Foreign exchange

The "terrorist data" was better than expected, supporting the Fed to start a rate cut cycle at a pace of 25 basis points. On Tuesday, the US dollar index rebounded to the 101 mark and finally closed up 0.34% at 101.

Rabobank said that the US presidential election in November will play a key role in the trend of the US dollar in late 2024 and early 2024. If Harris wins the election, it will allow a longer series of rate cuts, which means that the trend of the US dollar will be weaker than when Trump is president.

The pound closed down 0.42% against the US dollar at 1.3159 on Tuesday.

Mitsubishi UFJ analyst Lee Hardman said that as the Bank of England is expected to cut interest rates slower than the Federal Reserve, a pullback in the pound against the dollar this week could be a short-term buying opportunity. HSBC foreign exchange strategist Andrews said in a report that if the Bank of England remains cautious on rate cuts, the pound may fall as persistent inflation in the UK will further subside.

The euro closed down 0.17% against the dollar at 1.1113 on Tuesday. UniCredit said that the euro may remain strong before the Fed meeting, and if the Fed cuts interest rates by 25 basis points, the euro may face some profit-taking, but this may only prevent the dollar from weakening further, rather than triggering a complete reversal of the euro.

4. Commodities

London base metals generally closed lower on Tuesday, with LME copper futures closing down $20 at $9,370 per ton.

5. Stock market

The German DAX30 index closed up 107.41 points, or 0.58%, at 18,736.15 points on September 17 (Tuesday); The UK FTSE 100 index closed up 32.37 points, or 0.39%, at 8,310.81 points on September 17 (Tuesday); the French CAC40 index closed up 37.98 points, or 0.51%, at 7,487.42 points on September 17 (Tuesday); the European STOXX 50 index closed up 32.52 points, or 0.67%, at 4,860.15 points on September 17 (Tuesday); the Spanish IBEX35 index closed up 119.00 points, or 1.03%, at 11,700.00 points on September 17 (Tuesday); Italy's FTSE MIB index closed up 195.02 points, or 0.58%, at 33,765.00 points on Tuesday, September 17.

The Dow Jones Industrial Average closed down 15.90 points, or 0.04%, at 41,606.18 points on Tuesday, September 17; The S&P 500 closed up 1.49 points, or 0.03%, at 5,634.58 points on Tuesday, September 17; The Nasdaq Composite Index closed up 35.93 points, or 0.20%, at 17,628.06 points on September 17 (Tuesday).

On September 17 (Tuesday), China's Shanghai, Shenzhen and Beijing Stock Exchanges and domestic futures exchanges were closed due to the Mid-Autumn Festival, and will open as usual on September 18 (Wednesday).

6. Bond market

On Tuesday, U.S. Treasury yields rose slightly, with the benchmark 10-year Treasury yield closing at 3.659%; the two-year Treasury yield, which is more sensitive to monetary policy, closed at 3.615%.

According to CME's "Fed Watch": The probability of the Fed cutting interest rates by 25 basis points in September is 37.0%, and the probability of a 50 basis point cut is 63.0%. The probability of the Federal Reserve cutting interest rates by 50 basis points by November is 18.7%, the probability of cutting interest rates by 75 basis points is 50.2%, and the probability of cutting interest rates by 100 basis points is 31.1%

International News

① Pager explosions in many places in Lebanon have caused 9 deaths and 2,750 injuries; the Lebanese caretaker government ministerial meeting subsequently issued a collective statement "condemning Israel's aggression", and Hezbollah vowed to retaliate

② Sources said that Venezuela's largest refinery has been paralyzed due to power failure since September 12

③ Sources said that the United States will take advantage of relatively low oil prices to seek to replenish 6 million barrels of war reserves

④ According to the USA Today/Suffolk University poll, Harris and Trump's support rates in Pennsylvania are 49% to 46%

⑤ Turkish Energy Minister: Turkey has the ability to export 25 billion cubic meters of natural gas to the European market, and only needs to increase interconnection capabilities with neighboring countries

⑥ South Korea expects its bonds to be included in the FTSE World Government Bond Index, but Goldman Sachs and other institutions are skeptical

⑦ Singapore plans to make "bold reforms" to its regulatory structure to revive its sluggish stock market

⑧ Thailand will increase debt by 8% to $78 billion to stimulate economic growth

⑨ Cyprus and Greece have made progress in negotiations on a multi-billion dollar cable connection

⑩ According to PUNCHBOWL: US House Speaker Johnson plans to vote on a temporary spending bill on Wednesday

Domestic News

① The latest data released by the National Bureau of Statistics shows that the process of intelligent transformation of the manufacturing industry continues to advance

② The passenger flow of Beijing's key business districts during the Mid-Autumn Festival exceeded 20 million

③ The Hong Kong Special Administrative Region Government launched a HK$10 billion "New Industry Acceleration Plan"

④ Fliggy: Mid-Autumn Festival tourism hit a new high, and the average domestic travel bookings per capita increased by 5% compared with the Dragon Boat Festival

⑤ Qunar: Eleventh travel bookings are hot Tickets for multiple trains have been sold out

Institutional viewpoint summary

① Societe Generale remains bullish on gold, but bearish on oil and base metals

② Goldman Sachs: Gold prices may see a small correction in the short term, and will still rise to 2,700 at the beginning of next year

③ Capital Economics predicts that silver prices will rise in 2025, but will remain in the shadow of gold. Gold prices will reach $2,750 per ounce by the end of next year. Given that silver prices tend to rise in tandem with gold prices, silver prices may also rise. However, silver prices are unlikely to rise as strongly as gold prices by 10% between now and the end of 2025 as expected

④ Standard Chartered Bank warned that the Federal Reserve should not cut interest rates by 50 basis points this week because it may see an increase in unemployment in September

⑤ Tu Nguyen, an economist at small business consulting firm RSM Canada, said the Bank of Canada may gradually cut interest rates at intervals of 25 basis points, even though inflation has returned to the central bank's key target of 2%

⑥ NAB chief economist Alan Oster said the Reserve Bank of Australia is unlikely to cut interest rates before May next year

⑦ Standard Chartered Bank: The Fed has no convincing reason to initiate a large-scale interest rate cut

⑧ Bank of New York Mellon pointed out after analysis that the Bank of England and the European Central Bank will not follow the Fed's 50 basis point interest rate cut, but will continue to focus on domestic issues