September 24 Financial Breakfast: Several Fed officials confirmed that interest rates will continue to be cut, and Israel declared a state of emergency

(September 24) Financial breakfast, including 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. The US S&P Global Manufacturing PMI in September hit a 15-month low. Several Federal Reserve officials opened the door to further significant interest rate cuts. On Monday, spot gold once hit a record high. Israel's large-scale air strikes in many places in Lebanon have killed 492 people. Israeli media said that Israel has entered a "state of emergency."

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Overview of major global market trends

1. Precious metals

The initial value of the US S&P Global Manufacturing PMI in September was 47, expected to be 48.5; the initial value of the S&P Global Services PMI in September was 55.4, expected to be 55.3.

Chicago Fed President Goolsbee, Atlanta Fed President Bostic and Minneapolis Fed President Kashkari all said on Monday that they supported the Fed's decision to cut interest rates by 50 basis points last week. Bostic acknowledged that the Fed may have room to cut interest rates before reaching the neutral rate. Fed Kashkari expects the Fed to take smaller interest rate measures in the future, and it is expected to cut interest rates by another 50 basis points in 2024.

According to CME's "Fed Watch": The probability of the Fed cutting 25 basis points by November is 45.2%, and the probability of cutting interest rates by 50 basis points is 54.8%. The probability of a cumulative 50 basis point cut by December is 23.4%, the probability of a cumulative 75 basis point cut is 50.2%; the probability of a cumulative 100 basis point cut is 26.5%

Due to weaker US data and expectations of a sharp interest rate cut, spot gold hit a record high of $2,634/ounce on Monday, and finally closed up 0.24% at $2,628.54/ounce. Spot silver did not keep up with the pace of gold, and finally closed down 1.54% at $30.69/ounce.

2. Crude oil

Weak business activity in the eurozone and market concerns about future crude oil demand have put pressure on international oil prices. On Monday, WTI crude oil hit a low of $69.34 per barrel and finally closed down 0.76% at $70.58 per barrel; Brent crude oil closed down 0.61% at $73.59 per barrel.

3. Foreign exchange

The US dollar index showed an inverted V-shaped trend on Monday, closing up 0.201% at 100.94. After the Federal Reserve's sharp interest rate cuts, Goldman Sachs expects the US dollar to gradually weaken as yields lose their appeal. Goldman Sachs has instead raised its forecasts for several major currencies, including the euro, pound and yen.

The Australian dollar closed up 0.46% against the US dollar at 0.6837 on Monday. The Reserve Bank of Australia will hold an interest rate decision on Tuesday. HSBC predicts that the Reserve Bank of Australia will remain on hold this week and expects to start a rate cut cycle next year.

The pound closed up 0.2% against the US dollar at 1.3346 on Monday. Some warn that the pound's recent gains on interest rate differentials could be threatened by the budget, which is due on October 30. Jane Foley, head of FX strategy at Rabobank in London, said the fiscal plan "could be a test for sterling bulls" if the tax hikes undermine the initial improvement in UK investor confidence.

Expectations of a rate cut from the European Central Bank have increased, and the eurozone's manufacturing PMI hit a new low for the year in September. The euro fell 0.47% against the dollar on Monday to 1.1110. Commenting on the PMI preview, Dr. Cyrus de la Rubia, chief economist at Hamburger Commerzbank, said that at a time when the ECB is closely watching persistently high inflation in the service sector, the news that both input and output price inflation have slowed is undoubtedly welcome. Coupled with the deepening recession in the manufacturing sector and the near stagnation of the service sector, the possibility of another rate cut in October is likely to be put on the agenda, although this is not yet expected by the market.

Traders have increased their bets on a 25 basis point rate cut in October, with a 40% probability of a 25 basis point cut in October, which could put the euro under pressure.

4. Commodities

London copper and tin closed up more than 0.7% on Monday.

5. Stock market

China's Shanghai Composite Index closed up 12.1 points, or 0.44%, at 2748.92 points on September 23 (Monday); China's Shenzhen Component Index closed up 8.24 points, or 0.1%, at 8083.38 points on September 23 (Monday); China's CSI 300 Index closed up 11.71 points, or 0.37%, at 3212.76 points on September 23 (Monday); China's ChiNext Index closed down 6.09 points, or 0.4%, at 1530.51 points on September 23 (Monday); China's Science and Technology Innovation 50 Index closed down 5.32 points, or 0.82%, at 643.04 points on September 23 (Monday). The reform of state-owned enterprises continued to be active, with individual stocks in the two markets rising and falling by nearly half, and the transaction volume exceeded 550 billion yuan.

Germany's DAX30 index closed up 114.59 points, or 0.61%, at 18,845.45 points on September 23 (Monday); Britain's FTSE 100 index closed up 29.20 points, or 0.35%, at 8,259.19 points on September 23 (Monday); France's CAC40 index closed up 7.82 points, or 0.10%, at 7,508.08 points on September 23 (Monday); Europe's STOXX 50 index closed up 14.31 points, or 0.29%, at 4,885.85 points on September 23 (Monday); Spain's IBEX35 index closed up 53.25 points, or 0.45%, at 11,806.55 points on September 23 (Monday); Italy's FTSE MIB index closed down 76.25 points, or 0.23%, at 33,686.00 points on Monday, September 23.

The Dow Jones Industrial Average closed up 61.29 points, or 0.15%, at 42,124.65 points on Monday, September 23; The S&P 500 closed up 16.02 points, or 0.28%, at 5,718.57 points on Monday, September 23; The Nasdaq Composite Index closed up 25.95 points, or 0.14%, at 17,974.27 points on Monday, September 23.

6. Bond market

On Monday, U.S. Treasury yields rose and fell, with the benchmark 10-year Treasury yield closing at 3.751%; the two-year Treasury yield, which is more sensitive to monetary policy, closed at 3.595%. ,

International News

①Israeli Defense Minister said that the attack on Lebanon would be deepened. According to security sources, Israeli air strikes hit the southern suburbs of Beirut

②Israel has entered a state of emergency, and the United States will send additional troops to the Middle East

③Iranian President said that Iran is willing to ease tensions with Israel as long as the other party makes the same level of commitment

④China and Switzerland officially launched negotiations to upgrade the free trade agreement

⑤France has requested a further postponement of the submission of budget plans for the next few years as the EU is increasingly concerned about France's ability to control spending

⑥Western countries have formed an alliance to support key mineral projects

Domestic News

①Shanghai's three leading industry mother funds launched the first batch of sub-funds for public selection

②National Bureau of Statistics: Vigorously promote the scientific investigation system, digitalization of micro-foundations, intelligent data governance, diversification of service products, and professionalization of talent teams

③Statistics show that the total number of Chinese manufacturing enterprises has exceeded 6 million

④Jiangsu has issued an implementation plan to promote the high-quality development of the silver economy and build more than 10 silver economy characteristic parks in three years

Institutional Views Summary

①VanEck's CEO Jan van Eck believes that the best investment this year is to "hedge against the political cycle", which means investing in gold

② Huatai Securities: The bottom of A-shares is beginning to emerge

③ HSBC: The Reserve Bank of Australia will remain on hold this week and is expected to start a rate cut cycle next year

④ Survey: 30 of the 32 economists expect the Swiss National Bank to cut its policy rate by 25 basis points to 1.00% on September 26

⑤ Nordea Union Bank expects the Swedish Central Bank to cut interest rates by 25 basis points to 3.25% this week

⑥ Capital Economics: UK economic growth is slowing to a more normal level

⑦ Fitch: The US job market is not expected to deteriorate significantly despite the Fed's rate cut