Morning Wrap (06.11.2023)

• Markets in the Asia-Pacific region are gaining at the beginning of the new week. The leaders of the gains are the indexes in China, which are rising from 1.50% to 1.80%.

• U.S. 10-year bond yields are slightly rising and are trading at around 4.580%. Meanwhile, the dollar remains slightly weaker, with declines ranging between 0.1-0.3% on most major currency pairs.

• New information from the Israel-Hamas front:

  • Hezbollah leader Hassan Nasrallah will deliver a speech on November 11.

  • Iran's Supreme Leader Chamenei met with Hamas leader Haniyeh in Tehran on Sunday, confirming Iran's involvement in the conflict.

  • Israeli Prime Minister Netanyahu reiterated that he does not intend to cease military operations until hostages are returned.

  • The Gaza Ministry of Health is calling on Egypt to provide ambulance transport from hospitals in Gaza and to transport patients to Egyptian hospitals.

  • Iran's Defense Minister warns the USA that they will be severely affected if they do not implement a ceasefire in Gaza.

  • The U.S. military has confirmed that a Ohio-class submarine has arrived in the Middle East. The location of the submarine is not known, but this time it clearly aims to visit Iran to de-escalate the conflict.

• Saudi Arabia and Russia will extend their voluntary production cuts by 1 million barrels per day in December, in line with widespread expectations.

• The Japanese yen is one of the weakest currencies following comments from Bank of Japan Chairman Ueda and the release of minutes from the last meeting.

• Bank of Japan Governor Ueda once again emphasized that BOJ will keep short-term negative interest rates and YCC unchanged until inflation stably exceeds 2%. There is no expected change in policy, and the next key event will be the spring wage growth negotiations in Japan.

• Japan's economy is moderately picking up, and it is likely to continue this recovery. Members of the board agreed that there is not yet a sustained and stable improvement in price stability. Most members stated that there is no need for additional steps regarding YCC control.

• Barclays expects the U.S. Federal Reserve to raise interest rates by 25 basis points in January 2024, previously anticipating an increase in December 2023.

• On the other hand, Goldman Sachs believes that the Fed has already completed its rate hike cycle. The bank also does not expect interest rate cuts until the fourth quarter of 2024, assuming a strong economy

• The new finance minister in China has supported accelerating the issuance and use of government bonds. China's Lan Foana advocates increasing debt to stimulate the economy and pursuing proactive fiscal policy.

The Japanese yen weakened after the release of the minutes and Ueda's comments. However, the USDJPY has been holding below 150. Source xStation 5.