Macroeconomic Situation Weekly Report: Finding Balance Amid Market Adjustments

1. Macroeconomic Review of This Week

1. The overall market performance is cautious.

This week, the financial markets generally showed a trend of adjustment, and investor sentiment became cautious:

• The three major U.S. stock indices experienced a pullback, with the Dow Jones Industrial Average falling by 3.1%, the Nasdaq index down by 2.6%, and the Russell 2000 index decreasing by 1.8%.
• The utilities sector rose by 1.4% against the trend, becoming the only industry to increase, indicating a shift of funds towards defensive assets.
• The VIX volatility index remains above 20, reflecting that market sentiment is still in a cautious adjustment phase.

2. The product market is clearly differentiated.

• Gold prices have surpassed $3000 per ounce, reaching a historical high, reflecting an increase in safe-haven demand.
• Copper prices rose by 3.9%, indicating that manufacturing demand still has some support.
• Crude oil prices remain stable around $67, but net futures positions have decreased by more than 9.6%, reflecting a weak market expectation for global demand growth.
• Natural gas prices continue to decline, mainly affected by oversupply and weak industrial demand.

3. Cryptocurrency market synchronized adjustment

• The short-term selling pressure on Bitcoin has eased somewhat, but the overall trend is still downward.
• Altcoins like Ethereum and Solana are performing poorly, reflecting a decline in market risk appetite.
• The market capitalization of stablecoins continues to grow, but net inflows are slowing down, indicating that market liquidity is becoming cautious.

4. Global Supply Chain Acceleration and Adjustment

• The Baltic Dry Index ( BDI ) continues to rise, indicating strong shipping demand in the Asia-Europe region, and manufacturing capacity may accelerate its transfer overseas.
• The US Transportation Index declined by 6.5%, indicating weak domestic demand and a drop in local logistics demand.
• This divergence reflects that the global supply chain is undergoing regional restructuring, with domestic demand in the United States slowing down, while manufacturing and export activities in the Asia-Europe region remain relatively active.

5. Inflation data cools but expectations diverge

• Both CPI and PPI data fell short of expectations, reinforcing the market's anticipation of interest rate cuts by the Federal Reserve within the year.
• Consumer inflation expectations have risen, but there are significant partisan divides, increasing market uncertainty.
• The divergence between actual inflation data and expectations has intensified the adjustment pressure in the short-term market.

6. Liquidity is easing but credit risk is increasing.

• Outflows from the U.S. Treasury General Account (TGA), a decrease in the usage of the Federal Reserve's discount window, and overall liquidity trending towards stability.
• The corporate credit spread has widened, with North American investment-grade credit default swaps (CDX IG) rising by over 7%.
• The U.S. sovereign CDS and high-yield bond credit default swaps have both risen, reflecting increased market concerns over debt risk.

2. Macroeconomic Outlook for Next Week

1. Key Variables

• FOMC Meeting: Focus on the Federal Reserve's dot plot for interest rate cut guidance ( expecting 2-3 rate cuts ).
• Whether QT will pause will become the market focus and may affect risk appetite.
• Retail data and global central bank dynamics will also influence market trends.

2. Investment Strategy Recommendations

• US stocks: Reduce allocation to high β assets, increase holdings in defensive sectors, and pay attention to mispricing opportunities.
• Crypto Market: Hold Bitcoin for the long term, reduce altcoin allocation, and observe changes in stablecoin liquidity.
• Credit Market: Reduce exposure to high-leverage corporate bonds, increase allocation to high-rated bonds, and be wary of the risks associated with the U.S. debt deficit.
• Key turning point signal: Pay attention to the repair of the credit market or clearer easing signals released by the FOMC.

Overall, the market is still seeking a new balance point, and investors need to maintain a cautious attitude while seizing potential opportunities for undervalued quality assets.