Last week, as expectations for a Federal Reserve rate cut in November cooled down, the US dollar index rose at one point. With the continued expectation of rate cuts, the US dollar index fluctuated downwards and closed lower. On October 24th, the US dollar index fluctuated and fell. The US dollar index, which measures the US dollar against six major currencies, fell by 0.36% that day, closing at 104.058 in the foreign exchange market.

Market participants stated that, in addition to profit-taking putting some pressure on exchange rates, the good performance of US-related economic data and the cooling expectations of the Federal Reserve continuing to make significant rate cuts limited the space for exchange rate adjustments.

Expectations of Federal Reserve rate cuts affect the trend of the US dollar index. Recently, the market's expectations for a rate cut by the Federal Reserve in November have decreased, with the belief that the Federal Reserve may adopt a more moderate approach to rate cuts, leading to a rebound in the US dollar index. From the current perspective, the pace of Federal Reserve rate cuts may slow down, but the overall direction of rate cuts is expected to remain unchanged.

Bond Market

Short-term expectations are for continued fluctuations.

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Last week, as the stock market continued to be weak and volatile, the bond market as a whole continued the trend of downward yield, with the 10-year government bond yield once again falling below 2.11%, and high-grade credit bonds also experienced a rapid recovery, with credit spreads narrowing overall.

The current interest rate bond yields in the bond market have once again returned to low levels, and the short-term risk of interest rate bond market yields rising mainly comes from the stock market and the 2.10% central bank regulatory line, but the probability of a significant increase in yields is low.

The overall stance remains cautious towards duration strategies, and it is still recommended to maintain short-term liquidity defense in interest rate bond allocation. Although credit bonds have seen a recovery, there is still room for credit spreads to narrow. In a volatile market, the credit bond coupon strategy may offer better value for money.Precious Metals

U.S. Treasury Bonds Rebound

Gold Prices Strengthen Again

Last week, COMEX gold closed at $2,748.8 per ounce, up 0.71%. Domestic SHFE gold futures experienced a decline followed by an increase, closing at 624.92 yuan per gram, up 0.39%.

On the evening of last Thursday, the U.S. October Markit manufacturing and service PMI data both reached a two-month high, with the service sector showing strength and manufacturing sector improvement, and the price inflation indicator at its lowest in four and a half years.

Guotai Futures believes that a series of U.S. data supports the bet on a conventional interest rate cut of 25 basis points in November. U.S. Treasury yields across the board have rebounded but remain above 4.00%, with the 10-year U.S. Treasury yield falling by about 4.2 basis points, retreating from a three-month high. The U.S. dollar index fell by about 0.4% on Thursday, ending a three-day rise and detaching from a nearly three-month high, as gold prices strengthened again, approaching historical highs. However, given that silver's profit-taking led to a renewed weakness in the market, one should be cautious of the high-level correction risks in gold prices brought about by capital flows.

Futures MarketEnergy Sector and Downstream Chemicals May Continue to Experience Wide Fluctuations

Last week, the international crude oil market experienced a fluctuating decline, with international oil prices rising during the session as market caution increased. Gold and precious metal futures rose repeatedly, maintaining a strong trend.

Jinlianchuang crude oil analyst Han Zhengji stated that several institutions had previously downgraded their forecasts for global oil demand growth in 2024, with investor concerns about the demand outlook causing international oil prices to come under pressure and fall back. However, subsequently, some regional situations attracted attention, and on October 25th, international crude oil prices rose during the session, with investors maintaining a watchful attitude towards the situation in the Middle East.