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Hello everyone, today XM Forex will bring you "[XM Forex]: High market Sanae signed a huge investment in the United States + Ueda Kazuo's 'dove release', the selling pressure on the United States and Japan intensified!". Hope this helps you! The original content is as follows:
On Thursday, affected by Powell's hawkish attitude, the U.S. dollar index strengthened. As of now, the U.S. dollar is quoted at 99.48.
U.S. Treasury Secretary Bessant: Appreciates the Fed's interest rate cut, but is not satisfied with the wording. The Federal Reserve's skeptical www.centrdom.infoments about whether to cut interest rates again this year show that the agency is in urgent need of major reforms.
The European Central Bank unanimously agreed to keep the deposit mechanism interest rate unchanged at 2%, keeping the policy unchanged for the third consecutive meeting.
The Bank of Japan kept interest rates unchanged, and two officials voted to raise interest rates by 25 basis points.
The President of Lebanon ordered the army to respond to the Israeli invasion.
Wells Fargo looks forward to the U.S. Treasury Department’s quarterly refinancing report: the scale of bond issuance will remain at... until early 2027
We do not expect major policy changes in the U.S. Treasury Department’s upcoming quarterly refinancing statement (November 3). We maintain our current view that the current total size of bond issuance will remain stable until early 2027. We forecast that the U.S. Treasury Department will report www.centrdom.info tradable bond financing of $697 billion in the current quarter and $795 billion in the first quarter of 2026. In terms of medium-term outlook, our forecasts for the federal budget deficit are: US$2 trillion in fiscal year 2026 and US$2.1 trillion in fiscal year 2027.trillion US dollars, US$2.25 trillion in fiscal year 2028. Considering that the Supreme Court may overturn the Trump administration's policy of implementing reciprocal tariffs under the International Emergency Economic Powers Act, we believe that the budget deficit is at risk of expanding.
The Federal Reserve announced yesterday that it would end its balance sheet reduction plan. The drawdown of mortgage-backed securities will continue and proceeds will be reinvested in Treasury securities starting on December 1. We estimate that these purchases will remain at approximately $16 billion per month and continue indefinitely. The more difficult question to answer is when the Reserve Management Purchase Program will begin. Our baseline forecast is that such purchases will start in April next year, with a monthly scale of approximately US$25 billion, all focused on Treasury purchases.
Looking forward to 2026, we expect outstanding national debt to increase by US$648 billion, an increase of approximately 10% from 2025. However, the Fed's Treasury bond purchasing operations will effectively absorb this part of the supply growth. We predict that the Fed’s Treasury bond purchases will reach US$459 billion in 2026. Therefore, even if the proportion of Treasury bonds in the bond market rises to 23% in 2027, the Fed's purchases can ensure that the proportion held by private investors remains at around 20%.
We reserve the view that Treasury supply will be a key determinant of yield levels in 2026. In our view, other factors such as economic growth prospects, inflation trends, the www.centrdom.infoposition of the Federal Reserve and the path of the federal funds rate will have a dominant impact on the 10-year Treasury yield next year. In view of the 2026 economic growth forecast that is higher than the market consensus and the terminal federal funds rate judgment of 3.00%-3.25%, we continue to maintain our expectation that the 10-year U.S. Treasury yield will rise moderately next year.
Wells Fargo: The threshold for interest rate cuts in December will be higher, waiting for data after the shutdown
As widely expected by the market, the Federal Open Market www.centrdom.infomittee lowered the federal funds rate target range by 25 basis points to 3.75%-4.00% at the end of the October meeting. However, Chairman Powell made it clear that further easing in December is far from certain. The statement after the meeting mentioned that due to the government shutdown, the range of data that the FOMC could refer to in the past month was relatively limited. The www.centrdom.infomittee did suggest, however, that its concerns about the labor market had not worsened in the break between meetings.
October’s policy rate decision was not unanimous. Governor Milan dissented, advocating a more substantial 50 basis point interest rate cut, while Kansas City Fed President Schmid held the opposite opinion and advocated keeping the federal funds rate unchanged. The divisive dissent was not entirely unexpected, given that high inflation and weak job growth have created some tension between the www.centrdom.infomittee's price and employment targets. But as the outlook for the job market has not deteriorated significantly over the past month, inflation remains stubbornly above target, and policy is now closer to neutral, the threshold for another interest rate cut in December is higher.
Our basic forecast is still that the FOMC will cut interest rates by another 25 basis points at the December meeting. Having said that, given the inflation and employmentThere is a delicate balance of risks around industry targets, and a flood of data www.centrdom.infoing out of the shutdown could quickly change the outlook and our expectations for the December meeting. Chairman Powell does not believe this is a done decision, and neither do we.
It is worth noting that the FOMC announced that quantitative tightening will end on December 1. This is a month ahead of our longer-term forecast, although looking at the bigger picture of the Fed's $6.6 trillion balance sheet, the roughly $20 billion per month tapering process is shortened by one month, which we do not believe will have a material impact on long-term yields.
TS Lombard Agency: "American exceptionalism" is too single-minded and will eventually collapse again next year
* Don't take the U.S. dollar lightly - the U.S. dollar's response mechanism to shocks has undergone a fundamental change.
* Financing-type shocks are still good for the dollar, but now the Fed can intervene at any time, and systemic default risks are no longer a major concern.
* Hedging shocks are negative for the U.S. dollar - long funds will not sell assets, but increase their hedging ratio, and traders will transmit this shock to the spot market.
Since we published "Multiple Nixon Shocks" in May 2024, we have been building the thesis that "the dollar will enter a multi-year depreciation trend." "Liberation Day" and the subsequent market reaction made the outline of this story clearer. But in the past few months, that narrative has www.centrdom.infoe under renewed scrutiny. There are growing questions about whether the dollar selloff in April and May was just a blip. Nonetheless, we stand by our strategic judgment. There are usually only two reasons why the dollar rises - either the U.S. economy outperforms other countries, or safe-haven demand rises during certain types of shocks. And we continue to believe that "American exceptionalism" is too one-dimensional and will eventually collapse again next year, which will be detrimental to the dollar.
Danske Bank: The market underestimated the possibility of pausing interest rate cuts, and the Fed's next two meetings may...
Before this meeting, we expected Powell to avoid making any pre-commitments on interest rate cuts in December, but his clear rebuttal to market pricing this time was more hawkish than we expected. Powell stressed that "another rate cut in December is not a sure thing," citing "strong divisions" within the www.centrdom.infomittee and noting that "there are growing voices that we should perhaps wait a cycle before taking action." He also emphasized that despite the government shutdown, available data does not show that the labor market has cooled significantly further.
After the September meeting, we noticed that the proportion of members who wanted to cut interest rates continuously in October and December and to cut interest rates only once or not at all was almost equal. We pointed out at that time that the market underestimated the possibility of the FOMC suspending interest rate cuts because before this meeting, market pricing had already implied a more than 90% probability that interest rates would be cut again in December. We still maintain our judgment on suspending interest rate cuts in December and expect the next rate cut to be carried out in January next year. We continue to believe that the Fed’s more gradual pace of easing will be moreConducive to policy effects.
The market has fully anticipated the end of QT, and in addition to stopping the shrinkage of its balance sheet, the Federal Reserve also decided to use the redemption principal of mortgage-backed securities to invest in short-term bonds. While the decision may appear dovish on paper, U.S. Treasury yields had moved higher ahead of the press conference, likely reflecting the market's reaction to Schmid's surprise dissenting vote to keep rates on hold, while Milan's stance was more in line with expectations.
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