Last week, US economic data was relatively strong, with both CPI and PPI strengthening. The market was initially a bit shaky on the impact of the data, but ultimately determined that the trend of "core" inflation remained unchanged, and the trend of the yield curve steepening continued. US stocks hit record highs, high beta stocks and foreign exchange broke further, and the market still expects a 25 basis point rate cut in December with a probability of more than 85%. Citi's macro strategists expressed "extreme bullishness on stocks", while Goldman Sachs has been raising its target prices for US and Chinese stocks in the past few weeks.
In China, the much-anticipated Ministry of Finance press conference over the weekend was mixed, with no clear mention of the specific size of stimulus policies, a general lack of implementation details, and no announcement of measures to stimulate retail consumption. Although iron ore, crude oil and A-shares fell in early trading on Monday, prices have rebounded strongly before the lunch break, and Chinese retail funds may still maintain strong momentum to "buy on dips" in the short term.
In the U.S. stock market, JPM kicked off the third-quarter earnings season with a very strong performance. The banking giant's shares rose 5% after reporting an unexpected increase in interest income and raising its revenue forecast. The overall KBW Bank Index also rose to its highest level since April 2022. It is expected that the steepening trend of the yield curve will also further drive bank revenue growth in the coming quarters.
On the crypto side, while the SPX has been hitting new highs, cryptocurrencies are doing the exact opposite, with prices still struggling to break out of a range. The U.S. stock market is doing its best to push crypto prices higher, but we still believe the road to higher prices will be long before a more exciting narrative emerges. While prices are stuck in a range for a long time, traders still prefer to sell volatility and generate gains.
With Chinese stocks rebounding from weekend disappointment and BTC prices indeed jumping above $64,000 this morning, risk sentiment is likely to remain in "buy everything" mode until things change. Friday’s strong BTC ETF inflows may be a positive sign as we enter the final weeks of the campaign, although patience may still be needed before prices reach new highs.
