Macroeconomic Weekly Report: Market Adjustments Continue, Credit Risks Worth Following

1. Macroeconomic Review of This Week

1. The overall market performance is cautious.

This week, the market continued to adjust, and investor sentiment has become cautious. Major U.S. stock indices generally retreated, with the Dow Jones Industrial Average down 3.1%, the Nasdaq down 2.6%, and the Russell 2000 down 1.8%. Notably, the utilities sector rose 1.4% against the trend, reflecting a shift of funds towards defensive assets. The VIX volatility index remained above 20, indicating that the market is still in an adjustment phase.

2. The differentiation of the commodity market is明显

Gold prices have surpassed $3000/oz, setting a new historical high, highlighting the rise in safe-haven demand. Copper prices rose by 3.9%, indicating that manufacturing demand remains supported. Crude oil prices have remained stable around $67, but net futures positions have decreased by more than 9.6%, reflecting a weakening market expectation for global demand growth. Natural gas prices continue to decline, primarily influenced by oversupply and weak industrial demand.

3. Cryptocurrency market synchronized adjustment

Although the price of Bitcoin is showing a downward trend, the amplitude has narrowed, indicating a relief in short-term selling pressure. Altcoins like Ethereum and Solana are performing weakly, reflecting a decrease in market risk appetite. The market capitalization of stablecoins continues to grow, but net inflows are slowing down, suggesting that market liquidity is becoming more 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 be accelerating its shift overseas. Meanwhile, the U.S. transportation index has fallen by 6.5%, suggesting weak domestic demand. This divergence reflects that the global supply chain is undergoing regional restructuring, putting pressure on the U.S. domestic economy.

5. Inflation data cools but expectations diverge.

The CPI and PPI data for February both fell short of expectations, reinforcing the market's anticipation of interest rate cuts by the Federal Reserve this year. However, consumer inflation expectations from the University of Michigan have risen, showing significant partisan divides. This divergence between actual data and expectations has increased uncertainty in the market.

6. Liquidity marginally improved but credit risk increased

The outflow from the U.S. Treasury General Account (TGA) has led to a marginal rebound in broad liquidity, while the usage of the Federal Reserve's discount window continues to decline, indicating that the overall macro liquidity is tending to stabilize. However, corporate credit spreads are widening, with North American investment-grade credit default swaps (CDX IG) rising over 7%, and U.S. sovereign CDS also increasing, reflecting growing market concerns over corporate and government debt.

2. Macroeconomic Outlook for Next Week

1. Key Variables

Key variables in the market next week include the FOMC meeting, US retail sales data, and the direction of major global central banks. Investors will focus on the Federal Reserve's dot plot guidance for interest rate cuts (expected 2-3 cuts) and whether it will announce a pause in quantitative tightening (QT). These factors may significantly impact market risk appetite.

2. Investment Strategy Recommendations

• Stock Market: Reduce allocation to high beta assets, increase holdings in defensive sectors, and follow potential mispricing opportunities in high-quality blue-chip stocks.

• Cryptocurrency Market: Maintain a long-term holding strategy for Bitcoin, reduce the risk of altcoin allocation, and closely monitor changes in stablecoin liquidity.

• Credit Market: Reduce exposure to highly leveraged corporate bonds, increase allocation to high-rated bonds, and be wary of rising U.S. debt risks.

• Follow the core turning point signals: closely monitor signs of credit market recovery or the Federal Reserve releasing clearer easing signals.

The current market is still in a stage of multiple expectation games, and investors need to maintain a cautious attitude, seizing potential opportunities for quality assets when the market experiences over-adjustment.