As the December Federal Reserve meeting approaches, expectations for rate cuts dominate November’s market. The delayed September non-farm payroll report showed an increase of 119,000 jobs, exceeding market expectations, but the unemployment rate unexpectedly rose to 4.4%, with increases in unemployment across various categories. The Fed’s latest Beige Book indicates that ‘economic activity has changed little’ since the October report. Notably, consumer spending continues to decline, except in the resilient high-end retail sector, while the government shutdown negatively impacts consumption. Inflation is moderating, with overall prices rising ‘gently.’ Minutes from the meeting revealed that several officials saw insufficient reasons for a December rate cut, and with strong non-farm data, expectations for a cut dropped to 30%, putting pressure on risk assets and precious metals. However, subsequent dovish comments from several officials supporting a rate cut, combined with weaker-than-expected retail data, pushed expectations back up to 90%. Performance across asset classes diverged, especially as the AI competition in the tech sector shifted, leading to a decline in the Nasdaq while the Dow and S&P slightly rose.
In the gold market, another ‘whale’—the stablecoin issuer Tether—gradually emerged as an important buyer, alongside central banks and ETFs, expected to continue ramping up gold purchases. Gold oscillates at high levels, while silver, amid short squeeze rumors, shows stronger movement but faces significant resistance above $60 until it stabilizes.
Domestically, the RatingDog Manufacturing PMI dropped from 51.2 in September to 50.6 in October, still above the growth line but showing a noticeable slowdown in expansion. The private PMI index remains above the official index. The National Bureau of Statistics reported a manufacturing PMI of 49 in October, remaining below the growth line for seven consecutive months. The RatingDog Services PMI slightly decreased to 52.6 from 52.9 in September. October dollar-denominated exports fell 1.1% year-on-year, below market expectations of 2.9%, while imports rose 1.0%, also below expectations of 2.7%. The October CPI turned positive from negative, while the decline in PPI slightly narrowed. Market expectations suggest further weakening of economic data due to diminishing effects of past policies and higher base figures. Although recent data has trended downward, pressure to achieve the 5% annual target is manageable, and further stimulus measures are anticipated, though likely moderate in scale, primarily aimed at stabilization.
Entering December, with the Fed meeting on the horizon, the market reacts in advance with hawkish rate cut expectations. Many non-ferrous metals have weakened after hitting new highs, and investors lack motivation to chase prices higher before the meeting. Various commodities and stocks are likely to face a wave of adjustment, but the realization of rate cuts may present an opportunity for risk release.