Weekly Hot List Selection: Fed Rate Cut Announced but Hawkish Signals Emerge! Improvement in International Trade Sentiment

Market Review

US Dollar Index showed a trend of volatility followed by strengthening this week. At the beginning of the week, it fluctuated due to improved trade expectations and market wait-and-see sentiment. Subsequently, after Powell released a hawkish signal that a rate cut in December is not a foregone conclusion, the index surged strongly, reporting 99.7 at press time.

Precious metals continued to experience sharp fluctuations this week. At the start of the week, a cooling of risk aversion triggered a sell-off, with spot gold plunging more than 3% in a single day, falling below the $4,000 mark and hitting a three-week low. Subsequently, gold prices seesawed repeatedly as the market believed that conflict risks and policy uncertainties still existed, and gold is expected to close down for the second consecutive week. Silver performed slightly differently, rebounding after an initial drop and starting to rise during the European session on Tuesday, and is expected to close higher this week. As of press time, gold and silver were quoted at $4,021 and $48.89 per ounce, respectively.

The crude oil market was generally weak. In the first half of the week, oil prices continued to decline due to OPEC+'s plan to increase production and expectations of ample supply. EIA data showed a drop in inventories and US sanctions on Russian oil triggered a slight rebound, but the momentum was limited. On Friday, US media reported that the United States is about to launch a military strike against Venezuela, causing oil prices to rise.

US stocks started the week strongly, driven by the tech sector, with the three major indices hitting record highs consecutively. Apple's market value surpassed $4 trillion, and Nvidia broke through the $5 trillion mark. However, after the Federal Reserve meeting, market risk appetite cooled rapidly, tech stocks came under collective pressure, Meta plunged more than 11% at one point, and the Nasdaq fell.

Selected Investment Bank Views

Nomura Securities withdrew its expectation for another Fed rate cut in December. JPMorgan said that although Powell tried to clarify that a December rate cut is not a foregone conclusion, he believes subsequent data will show that employment remains unstable, which will prompt the Fed to continue cutting rates in December.

Citi lowered its short-term price targets for gold and silver to $3,800 and $42 per ounce. HSBC pointed out that gold prices are expected to peak in the first half of next year, with a peak target of $4,400. LBMA predicts that gold prices will approach $5,000 within a year, with silver and other metals rising as well.

Morgan Stanley pointed out that dollar positions have turned positive, but the medium-term outlook remains weak. Goldman Sachs stated that as monetary policy gradually normalizes, it is expected that the US dollar/yen will fall to 100 in the next decade.

Weekly Events

1. Fed Rate Cut + End of Balance Sheet Reduction, Powell Turns Hawkish and Dampens December Expectations

This week, the Federal Reserve cut rates by 25 basis points as expected, lowering the federal funds rate target range to 3.75%-4.00%, and announced that it would end balance sheet reduction on December 1. However, Powell unexpectedly turned hawkish at the press conference, dampening expectations for a December rate cut.

There are serious divisions within the Fed, with two dissenting votes in this rate decision. Governor Milan supported a 50 basis point cut, while Kansas City Fed President Schmid supported keeping rates unchanged.

Amid such serious divisions, Powell pointed out that in the context of a data vacuum and a still robust economy, a December rate cut is "not a foregone conclusion". He likened the current decision-making to driving in fog, saying that slowing down is the rational choice when the road ahead is unclear. He also said that more and more officials want to delay rate cuts.

In addition, Powell mentioned that pre-shutdown data showed the economy may be moving onto a more solid track, but downside risks in the job market have increased more than expected. Goods inflation has risen due to tariffs, while services inflation appears to be continuing to fall.

As for stopping balance sheet reduction, the Fed will freeze its balance sheet at the size as of December 1, reinvest the principal of maturing US Treasuries, and use the principal from MBS redemptions to buy short-term US Treasuries. Powell said signs of stress in the money market prompted the Fed to end balance sheet reduction.

After Powell unexpectedly turned hawkish, the market's expectation for a Fed rate cut in December dropped to 65%, down from 83% before the meeting. The year-end rate expectation rose by 4 basis points to 3.04% compared to before the meeting. As of Friday, CME "FedWatch" showed that the probability of a 25 basis point Fed rate cut in December is 74.7%.

US Treasury Secretary Besant praised the Fed's 25 basis point rate cut but criticized its subsequent statements, arguing that this Fed is still living in the past and using models that no longer work. Besant said he could not understand why the Fed hinted at reluctance to cut rates at the December meeting.

He said a second round of interviews would be held in early December to find new leadership to reform the Fed. During his trip to Asia, US President Trump said he had "considered" nominating Besant as the next Fed chair, but Besant had clearly declined the position. Trump also again criticized current Fed Chair Powell as "incompetent" and revealed that a new chair would be selected between late November and late December.

On Friday, Kansas City Fed President Schmid and Dallas Fed President Logan both publicly opposed the recent rate cut decision. Schmid said in a statement that he voted against the rate cut because he was concerned that economic growth and investment would put upward pressure on inflation. He believes the labor market has basically returned to balance, the economy continues to grow, but the inflation rate remains too high. Schmid pointed out that monetary policy should tend to curb demand growth, and rate cuts may have a more lasting negative impact on inflation. He also mentioned that current monetary policy is only moderately tight, and rate cuts may weaken the Fed's commitment to the 2% inflation target.

Dallas Fed President Logan also stated that the Fed should not cut rates this week, nor should it cut rates again in December. She believes the current economic outlook does not require rate cut support, the labor market is generally balanced, and inflation may remain above the 2% target for a long time. Logan emphasized that without clear evidence that inflation will fall faster or the labor market will cool faster, she would find it difficult to support another rate cut in December.

2. China and the US Reach Multiple Consensus Points in Kuala Lumpur Economic and Trade Consultations

According to the Ministry of Commerce's news office, the results and consensus reached by the China-US economic and trade teams through consultations in Kuala Lumpur mainly include the following aspects:

First, the US will cancel the so-called "fentanyl tariff" of 10% imposed on Chinese goods (including goods from Hong Kong and Macau SARs), and the 24% reciprocal tariff imposed on Chinese goods (including goods from Hong Kong and Macau SARs) will continue to be suspended for one year. China will accordingly adjust its countermeasures against the above US tariffs. Both sides agreed to continue extending some tariff exclusion measures.

Second, the US will suspend the implementation of its 50% penetration rule for export controls announced on September 29 for one year. China will suspend the implementation of related export control measures announced on October 9 for one year and will study and refine specific plans.

Third, the US will suspend the implementation of its Section 301 investigation measures on China's maritime, logistics, and shipbuilding industries for one year. After the US suspends the relevant measures, China will also suspend its countermeasures against the US for one year.

In addition, both sides reached consensus on cooperation in fentanyl drug control, expanding agricultural trade, and handling individual enterprise cases. Both sides further confirmed the results of the Madrid economic and trade consultations. The US made positive commitments in areas such as investment, and China will properly resolve the TikTok issue with the US.

3. US Government Shutdown "One Month In", Is There Hope for a Breakthrough in Bipartisan Negotiations?

The US government has been shut down for a full month, and there are new developments in bipartisan negotiations. Senate Majority Leader Thune said that the pace of negotiations has accelerated, and key deadlines have brought a sense of urgency to the talks.

Republicans believe that pressure from food benefit interruptions, air travel delays, and federal employee unions calling for an end to the shutdown may prompt moderate Democrats to compromise. However, Democrats have not publicly indicated their readiness to compromise, and Senate Minority Leader Schumer believes that Republicans will face greater negotiating pressure after November 1.

Republicans are discussing various versions of temporary funding bills, including postponing funding issues to January 21 or March. White House officials hope to postpone funding issues to December 2026, but this proposal has been opposed by appropriations committee members and some defense hawks. Thune said that temporary funding bills expiring before the end of the year are not feasible. Republicans have proposed to Democrats that once the government reopens, they will push for spending bills, but Democrats have not yet been convinced.

Healthcare remains a core concern for Democrats. Thune said that if the government reopens, US President Trump is willing to meet with Democrats as early as next week to discuss subsidies for the Affordable Care Act.

In addition, the Trump administration is also preparing to end the government shutdown. According to sources, the government plans to provide up to $12 billion in aid to farmers affected by tariff policies after the government restarts. This aid plan was originally put on hold due to the shutdown and is now "ready." Trump posted on social media late Thursday local time, urging Senate Republicans to abolish the Senate's legislative filibuster rule to break the nearly month-long government shutdown deadlock.

The US Congressional Budget Office stated that the government shutdown has already caused $1.8 billion in economic losses, and it will further worsen in the coming weeks.

With the government shutdown causing an official data vacuum, the private sector ADP Research Institute announced that it would release US employment data weekly as a supplement to its monthly report to provide high-frequency insights into the labor market. This data is based on a four-week moving average of total private sector employment changes and will be released every Tuesday at 8:15 pm Beijing time.

Since the US government shutdown, other companies such as LinkedIn and Revelio Labs have also provided employment market data. The US Bureau of Labor Statistics' October employment data, originally scheduled for release on November 7, may be delayed again, while ADP's monthly employment report will continue to be released, with the October report expected on November 5.

4. Trump Visits Japan, Sanae Takaichi Presents a "Grand Gift", US-Japan Relations Enter a "Golden Era"?

US President Trump concluded his visit to Japan this week, which was part of his Asia tour. During his stay in Japan, Trump held a series of meetings with Japan's new Prime Minister Sanae Takaichi. As Japan's first female prime minister, this meeting was seen as an important diplomatic test for her after taking office. Trump expressed support for Sanae Takaichi and promised that the US would provide assistance when Japan needed it.

The two sides signed a rare earth agreement aimed at strengthening US-Japan cooperation in key mineral sectors. In addition, the two countries signed a document announcing the start of a "golden era" in US-Japan relations and reaffirmed previously reached agreements, including the 15% tariff agreement negotiated earlier this year.

During the visit, Trump also visited the US aircraft carrier "George Washington" and was warmly welcomed by thousands of US soldiers. Sanae Takaichi gave a speech on the ship, praising the US-Japan alliance as "the greatest alliance in the world" and pledging to increase defense spending.

During the meeting, Sanae Takaichi also presented Trump with golf equipment and nominated him for the Nobel Peace Prize in recognition of his contributions to the Middle East peace process. Trump responded by saying that the US-Japan alliance is "a beautiful friendship born from the ashes of a terrible war" and approved the delivery of the first batch of F-35 fighter jet missiles to Japan.

In addition, this week Trump and South Korean President Lee Jae-myung officially finalized a trade and defense agreement totaling $350 billion, concluding months of negotiations. The US will reduce tariffs on Korean goods from 25% to 15%, and South Korea has pledged to make large-scale investments in the US.

5. Israel Strikes Gaza Again, Is the Ceasefire Agreement on the Brink?

This week, after Israel resumed attacks on Gaza for a day, Hamas handed over the bodies of two hostages to Israel.

Disagreements over the handover of bodies have become a major obstacle to ending the Gaza war. Israel accused Hamas of violating the ceasefire agreement, saying it failed to hand over the bodies of hostages in a timely manner, while Hamas accused Israel's military actions of undermining the ceasefire agreement.

On October 28, the Israeli Prime Minister's Office announced that after Hamas fired on Israeli forces in the Gaza Strip, Prime Minister Netanyahu instructed the Israeli military to launch a strong strike against Gaza. He emphasized that Israel's ultimate goal is to disarm Hamas and achieve the demilitarization of the Gaza Strip.

Hamas issued a statement denying involvement in the attack on Israeli forces in the Rafah area of southern Gaza and stressed that the organization "remains committed to the current ceasefire agreement." Hamas pointed out that Israeli military attacks in many parts of Gaza constitute a "serious violation" of the ceasefire agreement and called on mediators to pressure Israel to stop "dangerous and ongoing breaches."

On the US side, Trump said he was aware of Israel's airstrikes and believed Israel's response was reasonable, but he insisted that the ceasefire agreement remained in effect. Vice President Vance also said that despite small-scale clashes, the ceasefire continues. However, mutual accusations between the two sides have highlighted the fragility of the ceasefire agreement.

6. What Signals Did the 2025 Financial Street Forum Annual Conference Send?

The 2025 Financial Street Forum Annual Conference opened, with PBOC Governor Pan Gongsheng, Director of the National Financial Regulatory Administration Li Yunze, and CSRC Chairman Wu Qing making important speeches.

PBOC Governor Pan Gongsheng said the central bank will continue to adhere to a supportive monetary policy stance; resume open market operations in government bonds; study and optimize the positioning of digital RMB in the monetary hierarchy; research and implement policy measures to support individuals in repairing credit; accelerate the construction of a comprehensive macroprudential management system; explore mechanisms to provide liquidity to non-bank institutions in specific scenarios; and continue to crack down on domestic virtual currency operations and speculation.

Director of the National Financial Regulatory Administration Li Yunze said that a financial service model that balances investment in things and people will be built, long-term capital support policies will be improved, and disorderly competition will be resolutely corrected.

CSRC Chairman Wu Qing said that the deepening reform of the ChiNext board will be launched, the refinancing shelf registration system will be introduced at an appropriate time, high-level institutional opening-up will be steadily expanded, and a solid defense line for risk prevention and strong regulation will be built.

7. US-Russia Budapest Summit Canceled, Trump Restarts Nuclear Tests

The US canceled the planned summit between Trump and Putin in Budapest. The summit was originally intended to discuss how to end the Russia-Ukraine conflict.

However, according to foreign media reports, the Russian foreign ministry insisted on a tough stance in a memorandum, demanding that Ukraine make territorial concessions, drastically reduce its military forces, and guarantee never to join NATO. These demands were deemed unacceptable by the US. Trump was dissatisfied with Russia's stance and ultimately decided to cancel the summit.

Previously, Trump had briefly leaned toward Putin's position and even abandoned plans to provide "Tomahawk" missiles to Ukraine. However, Russia's tough attitude prompted the US to reassess its Russia policy. After the summit was canceled, Trump put greater pressure on Russia, including sanctioning Russia's two major oil producers and criticizing Putin for conducting nuclear tests instead of promoting peace talks.

On October 30 local time, Trump announced on social media that he had ordered the US military to immediately restart nuclear tests. He claimed that the US has the world's largest nuclear arsenal, Russia is second, and China "can catch up within five years." Trump said that since other countries are conducting nuclear tests, he has instructed the Pentagon to test US nuclear weapons on a reciprocal basis. However, this statement has raised many questions, as the last US nuclear explosion occurred in 1992.

In addition, according to US media reports, the Trump administration has decided to launch a military strike against Venezuela, targeting Venezuelan military facilities. The US has assembled military forces in the southern Caribbean, including redeploying the "Ford" aircraft carrier strike group.

8. ECB and Bank of Japan Both Keep Rates Unchanged Again

The Bank of Japan kept its current policy rate unchanged at its October 30 monetary policy meeting. Policy board members Naoki Tamura and Hajime Takata again proposed a rate hike, but the final decision was unchanged.

Governor Kazuo Ueda said that uncertainties about overseas economic and price trends caused by the US's high tariff policy remain strong, and the impact on the Japanese economy needs to be assessed. This meeting was the first since the establishment of the Sanae Takaichi government, and the central bank believes more time is needed to communicate with the government.

In addition, the European Central Bank decided for the third consecutive time to keep its 2% benchmark rate unchanged, in line with expectations. President Lagarde said that eurozone monetary policy is in a good position. Despite a challenging global environment, the eurozone economy continues to grow, the labor market is strong, private sector balance sheets are solid, and inflation is close to the 2% medium-term target.

Although the eurozone economy has shown initial growth, there are internal disagreements about future policy. Some policymakers and investors believe that the risks of slowing economic growth and inflation are high, with a 40% to 50% chance of a rate cut before next summer; hawks, however, believe that German defense and infrastructure spending will boost economic growth and prices.

The Bank of Canada announced a 25 basis point rate cut this week and lowered its economic growth forecast, stating that its policy rate is at an approximately appropriate level.

9. Nvidia's Market Value Breaks $5 Trillion for the First Time, Qualcomm Launches New Chips to Face Off

Nvidia made history again this week, becoming the world's first listed company with a market value exceeding $5 trillion, surpassing the GDP of countries such as India, Japan, and Germany. Since the launch of ChatGPT at the end of 2022, Nvidia's stock price has risen 12-fold, driving its market value to soar.

At this week's GTC conference, Nvidia announced that its Blackwell chips will bring in $500 billion in revenue over the next five quarters, far exceeding market expectations. The company also launched the AI-native 6G wireless technology stack NVIDIA ARC and reached cooperation agreements with companies such as Nokia to expand the AI ecosystem. Nvidia CEO Jensen Huang stated that there is no bubble in the AI market, and a turning point is coming.

Nvidia also announced this week that it will supply South Korea with more than 260,000 of its most advanced Blackwell AI chips.

Qualcomm launched new AI chips AI200 and AI250, which are planned to be shipped in 2026 and 2027, respectively. The new products offer up to 768GB of memory and focus on energy efficiency and AI inference tasks. After the news was announced, Qualcomm's stock price soared 20% intraday, the largest increase since 2019, and closed at a new high since July 2024.

This move by Qualcomm directly challenges Nvidia, the leader in AI computing. According to market forecasts, Nvidia's data center division alone is expected to generate more than $180 billion in revenue this year, a figure that exceeds the total revenue of any other chipmaker, including Qualcomm. If Qualcomm wins orders from major tech companies such as Microsoft, Amazon, and Meta, it will bring considerable new revenue.

10. Tech Earnings: Amazon Lays Off 14,000, Apple Expects Double-Digit Holiday Revenue Growth

Amazon's third-quarter earnings report showed net sales of $180.2 billion, up 12% year-on-year; net profit of $21.2 billion, up 38.6% year-on-year. Core business AWS net sales were $30.9 billion, up 20% year-on-year, the fastest growth in three years.

Amazon also plans to lay off 14,000 people this week, with severance costs expected to reach $1.8 billion. The layoffs aim to reduce bureaucracy, streamline hierarchy, and reallocate resources.

Apple expects double-digit revenue growth this holiday season, with iPhone 17 as the biggest contributor. The company's fourth-quarter sales grew 7.9% to $102.5 billion, exceeding expectations.

The earnings report showed strong growth in services, but the Chinese market faces competition. CEO Tim Cook said Apple is expected to resume growth in the Chinese market.

Other tech earnings: Meta's third-quarter net profit plunged 83% due to a one-time tax, from $15.69 billion to $2.71 billion. The company issued $30 billion in bonds this week, the largest high-grade corporate bond issuance this year, with total subscriptions reaching $125 billion, also a record for such transactions.

Microsoft's first quarter of fiscal 2026 revenue grew 18% year-on-year to $77.67 billion, beating analysts' expectations. Google's parent company Alphabet's quarterly revenue exceeded $100 billion for the first time, up 16% year-on-year; net profit rose 33% year-on-year.

11. OpenAI and Microsoft Reach Major Agreement, IPO as Early as End of 2026, Valuation May Reach $1 Trillion?

After nearly a year of negotiations with Microsoft, OpenAI decided to offer Microsoft a 27% stake, worth about $135 billion. This agreement not only eliminates major uncertainties faced by both parties, but also paves the way for OpenAI to transform into a for-profit enterprise. Under the agreement, Microsoft will have the right to use OpenAI technology until 2032, including models that have reached artificial general intelligence (AGI) benchmarks.

OpenAI has been pushing for restructuring this year, aiming to become a more traditional for-profit enterprise. Microsoft, as one of OpenAI's largest investors, was once the biggest obstacle in the restructuring process. The conclusion of this agreement marks an important step forward in the long-term cooperation between the two parties.

According to foreign media reports, OpenAI plans to go public as early as the end of 2026, with a valuation of up to $1 trillion. The minimum fundraising scale considered by the company is $60 billion, and the actual amount may be higher. Its current valuation is about $500 billion, with expected annualized revenue of about $20 billion by the end of the year, but losses are also expanding.