Disagreements within the Federal Reserve emerged, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on September 23

Global Market Review

1. European and American market conditions

The three major futures indexes rose and fell, with Dow futures rising 0.10%, S&P 500 futures falling 0.02%, and Nasdaq futures rising 0.01%. The German DAX index rose 0.34%, the UK FTSE 100 index rose 0.16%, the French CAC40 index rose 0.87%, and the European Stoke 50 index rose 0.63%.

2. Interpretation of market news

Some internal differences in the Federal Reserve have emerged, and the future policy trends are attracting attention

⑴ In the Federal Reserve's September interest rate resolution, Director Milan was the only official to vote against it, and he advocated a 50 basis point interest rate cut. Milan's speech on Monday showed that his position was very dovish. ⑵ Milan said that the appropriate policy interest rate should be around 2.5%, which is about two percentage points lower than the current interest rate level. Therefore, he believes that the Fed's current policy stance is very restrictive and may pose a risk to the Fed's employment goals. ⑶ Although Milan's views are clearly divided with most members of the Federal Reserve xn--xm-6d1dw86k.committee, its remarks have limited short-term impact on the US dollar. However, the market still needs to pay attention to future candidates for Fed chairs in the long run, especially if the new chairman's views tend to be more inclined toward Milan, which may have an impact on the dollar. ⑷ Institutional analysis believes that Milan’s remarks may provide the market with an insight into what position the Fed chairman may need to have in the future.

JPMorgan Chase's U.S. Treasury Client Survey showed that the proportion of shorts jumped to the highest since February 3

JPMorgan Chase's U.S. Treasury Client Survey for the week ending September 22 showed that the proportion of shorts rose by 4Percentage point, the proportion of bulls rose by 3 percentage points, while the proportion of neutral fell by 7 percentage points. All customer surveys show that the proportion of short positions has reached the highest level since February 3.

U.S. xn--xm-6d1dw86k.companies were awarded a sky-high contract at the Pentagon, and strategic materials became the focus.

⑴ On Tuesday, the U.S. Antimony Industry announced that it had obtained an exclusive supply contract from the U.S. Department of Defense Logistics Agency, a five-year contract worth up to $245 million, to supply antimony metal ingots to the national defense reserves. ⑵The signing of this contract xn--xm-6d1dw86k.comes amid a heightened geopolitical tensions, highlighting the U.S. government is working to strengthen its strategic material supply chain to reduce its dependence on foreign sources. ⑶ As one of the key minerals, antimony is widely used in ammunition, batteries, flame retardants and military-grade xn--xm-6d1dw86k.compounds, and has long been regarded by US defense officials as a weak link in its industrial foundation. ⑷ According to the statement of the CEO of the United States Antimony Industry xn--xm-6d1dw86k.company, it is of great significance to be able to play such an important strategic role in the United States' defense readiness. The xn--xm-6d1dw86k.company is one of only two antimony smelters in North America and is ready to start contract execution immediately from its domestic facilities. ⑸ The contract was reached after months of negotiations, further deepening the accelerated cooperative relationship between the US Antimony Industry Corporation and the US Department of Defense since the end of 2024.

Trump said autism and Tylenol are related to Tylenol. Both the WHO and the EU said there is a lack of evidence.

World Health Organization spokesman Tarik Yasarevich said on the 23rd local time that although some observational studies suggest that prenatal exposure to acetaminophen (the main ingredient of Tylenol) has a potential association with autism, the existing evidence is still inconsistent. Several studies have not found such associations. Yasarevich said that if acetaminophen has a significant association with autism, multiple studies should be able to observe this phenomenon consistently. This lack of repeatability requires us to be cautious in inferring the causal effect of acetaminophen on autism. On the same day, a spokesperson for the European xn--xm-6d1dw86k.commission also said that the European Medicines Agency has not found any evidence that pregnant women have been associated with autism after growing up. The spokesman said there is currently no evidence to suggest that the EU's current recommendations on the use of Tylenol are needed. The European xn--xm-6d1dw86k.commission believes that this risk lacks widely recognized scientific evidence to support it.

The incoming ECB Management xn--xm-6d1dw86k.committee Pereira said the central bank should retain "room of maneuver" interest rates

The incoming ECB member Alvaro Santos Pereira said that the ECB inflation rate has been controlled and the interest rate policy operation space should be maintained in the future. "The current inflation rate seems to meet the expected target," Pereira said in an interview. He continued to serve as chief economist of the OECD before taking office. "Monetary policy needs to reserve buffer space so that there is room for operation when it encounters a shock, which is crucial." Although some people believe there is still room for interest rate cuts this year, Pereira's remarks show that he is not in a hurry to further reduce borrowing costs. Markets and economists currently predict no further relaxation of policies.

PMI data is mixed, and the US bond market is waiting for guidance

⑴ Before a number of key data and important figures' speeches, the US Treasury market traded lightly and was in a narrow state of fluctuation. ⑵ The xn--xm-6d1dw86k.comprehensive PMI in the euro zone rose slightly to 51.2 in September, slightly higher than expected, with the service industry PMI performing strongly, while the manufacturing industry PMI disappointed to fall to the 49.5 contraction range. ⑶ The UK manufacturing PMI fell further to 46.2, and the service PMI was also lower than expected, indicating that economic activities are facing challenges. ⑷ The initial PMI data of the United States in September attracted much attention. The market generally expects its manufacturing PMI to drop from 53.0 to 52.0, and the service PMI to drop from 54.5 to 54.0. ⑸ In addition to PMI data, investors also closely monitored the speeches of several Federal Reserve officials, especially Chairman Powell's speeches. ⑹A Federal Reserve Board member previously said that the current federal funds rate may be too high, sparking discussions on policy direction. ⑺ Data shows that the US current account deficit in the second quarter is expected to fall sharply from a record high of $450.2 billion in the first quarter to $256.3 billion, which is mainly affected by the sharp contraction of goods trade under Trump's tariff remarks.

The hawkish stance continues, and the Brazilian central bank emphasizes long-term anti-inflation

⑴ In the minutes of the meeting from September 16 to 17, the Brazilian central bank stated that the xn--xm-6d1dw86k.committee will continue to monitor the pace of economic activities, believing that this is a fundamental driving factor for inflation. ⑵ The Brazilian central bank is particularly concerned about service industry inflation, emphasizing that although recent inflation data performed better than expected at the beginning of the year, the inflation outlook still faces higher than ordinary uncertainty. ⑶ All xn--xm-6d1dw86k.committee members were upset about the uncertainty of inflation expectations and believed that it must be suppressed. ⑷In an environment of uncertain inflation expectations, the Brazilian Central Bank believes that it will take longer to curb monetary tightening policies to effectively deal with inflation risks. ⑸ The Brazilian Central Bank maintained the benchmark interest rate at 15.00% at its latest meeting.

Debt dispute ignited, and Kurdish oil exports restarted and reached a deadlock

⑴A deal aimed at restarting oil exports in Iraq's Kurdish region stagnated on Tuesday. ⑵ Previously, two major oil producers in the region demanded a guarantee of repayment for their overdue debts, resulting in the agreement not being advanced as scheduled. ⑶ The agreement originally planned to restart oil exports of about 230,000 barrels per day, which have been in a state of interruption since March 2023. ⑷ Norwegian DNO and Genel Energy said they have not signed an agreement because they want to obtain a guarantee of repayment for overdue payments. ⑸ The Kurdish region's arrears to oil producers have accumulated to about US$1 billion, of which DNO estimates its overdue receivables to be approximately US$300 million. ⑹ It is not clear whether the agreement can continue without the participation of these two xn--xm-6d1dw86k.companies.

Data warning: Eurozone economy faces growth test

⑴Eurozone business activity data show that the September xn--xm-6d1dw86k.comprehensive purchasing managers index (PMI) rose to 51.2, achieving its ninth consecutive month of expansion. ⑵ Although the PMI index is above the expansion tipping point of 50, the index measuring new businesses has fallen from 50.3 to the critical point of 50, causing market concerns about the sustained economic growth in the euro zone. ⑶ After the data was released, the bond yields of countries in the euro zone did not change much, among which the yield on Germany's 10-year government bonds, as the benchmark, remained stable at around 2.745%, not breaking the two-week high hit on Monday. ⑷ Market expectations for the ECB's future policies remain stable. Traders expect a rate cut of about 12 basis points by June next year, implying that the probability of a rate cut is less than 50%. ⑸ Federal Reserve Chairman Powell is scheduled to make a speech on Tuesday, after investors are eager to seek clearer guidance due to internal differences within the Federal Reserve on future interest rate paths. ⑹The Netherlands successfully issued 5 billion euros of 30-year treasury bonds on Tuesday, reaching the upper limit of its target range, indicating that the market is satisfied with the current pricing of Dutch treasury bonds. ⑺In recent months, investors have been worried about the high levels of government debt in many countries, causing long-term bonds to be hit, such as Germany's 30-year government bond yields fell by 1.5 basis points to 3.346%.

Sweden unexpectedly cut interest rates, but the rate cut cycle may be over

⑴ The Swedish central bank unexpectedly announced a rate cut, which surprised the market, but this move is likely to be the last of this round of rate cut cycle. ⑵Torbjorn Isaksson, chief analyst at Nodea Bank, pointed out that although the Swedish economy has shown signs of recovery, the central bank still hopes to provide additional impetus for the economy through the rate cut. ⑶Nordeya Bank expects the Swedish central bank will not cut further interest rates, and the next policy adjustment will be a rate hike. ⑷ It is expected that interest rate hikes may occur in the first half of 2027, but the possibility of interest rate hikes next year is not ruled out, depending on Sweden's GDP growth. ⑸ Nevertheless, Isaksson believes it is too early to make clear predictions about the future rate hike path. ⑹ He stressed that interest rate cuts are usually easier than rate hikes.

3. Trends of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:23 Beijing time, the euro/USD fell and is now at 1.1788, a drop of 0.13%. Before New York, the price of (Euro-USD) fell in the last intraday trading to collect the gains of its previous rise in an attempt to obtain bullish momentum that could help it recover and rise again. In addition, the pair also tried to get rid of some obvious overbought status on the relative strength indicator, especially during trading above the EMA50, which strengthened the stability of the short-term major bullish trend as it moved along the trend line as negative signals emerged.

GBP/USD: As of 20:23 Beijing time, GBP/USD rose, now at 1.3517, an increase of 0.03%. Before the New York Stock Exchange, (GBPUSD) priceThe last trading day rose after it relied on support from major bullish trend lines on a short-term basis to gain bullish momentum to help it achieve these gains and was supported by positive signals on the relative strength indicators.

Spot gold: As of 20:23 Beijing time, spot gold rose, now at 3783.28, an increase of 0.98%. Before the New York Stock Exchange, the (gold) price continued to rise on the last trading day, continuing to hit a new high, breaking through the $3755 resistance, which was our previous expected target, supported by its ongoing trading above the EMA50 and fully dominated by the main bullish trend and trading along the support trend line, on the other hand, we noticed negative signals on the relative strength indicator after reaching the overbought level, which could reduce the price’s upcoming earnings.

Spot silver: As of 20:23 Beijing time, spot silver rose, now at 44.311, an increase of 0.60%. Before the New York Stock Market, the (silver) price rose on the last trading day, breaking the resistance of $44.05, which represents the expected target in our previous analysis, supported by its ongoing trading above the EMA50 and dominated by major bullish trends on a short-term basis and trading along the trendline, besides positive overlapping signals on the relative strength indicators, it has opened up a path for more gains in the near term after unloading some overbought conditions.

Crude oil market: As of 20:23 Beijing time, U.S. oil rose, now at 63.130, an increase of 1.38%. Before New York, crude oil prices rose strongly in the last day trading, supported by positive signals from relative strength indicators, after reaching oversold levels, retesting $62.95 and hitting resistance from EMA50, causing it to bear intensified negative pressure and turn to a bearish trend again.

4. Institutional view

CITIC Macro: India's household debt risks may be highlighted when the interest rate cycle turns in 2027

CITIC macroeconomist Sheeran Shah pointed out in his research report that if the central bank's monetary policy turns from loose to tight in the future, India's rising household debt may cause concerns. Since the beginning of this year, the Reserve Bank of India has cut interest rates by 100 basis points, and is expected to cut interest rates by 50 basis points further. The continued decline in interest rates are alleviating the burden of household debt.

But Shah believes that the interest rate cycle may shift in 2027, when rising debt repayment costs will curb consumer demand. He stressed that the risk of default could pose a greater threat to the Indian economy, noting that a large proportion of current household lending may be loan-free.

The above content is all about "[XM Foreign Exchange Official Website]: Some internal differences in the Federal Reserve appear, and the short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on September 23" was carefully xn--xm-6d1dw86k.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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