Market Review
Key News
China Market
1. Several banks announce deposit rate cuts
Since October, several village and town banks have announced adjustments to their time deposit rates, with medium and long-term deposit rates experiencing significant declines. Overall, China's bank deposit rates have been decreasing. According to the team from CITIC Securities, as of September, the average one-year deposit rate fell to 1.988%, dropping below the 2% threshold. Despite the complex operating environment, banks still have the motivation to push deposit rates lower. However, it is worth noting that although the deposit rates of village and town banks have decreased, their rates are still relatively high compared to other types of banks.
2. The gap between M2 and M1 widened in October compared to the previous month
In October, China saw an increase in both new social financing and new RMB loans over the same period last year, with the gap between M2 and M1 expanding compared to the previous month. Specifically, the increase in social financing in October was 1.85 trillion yuan, 910.8 billion yuan more than the same period last year. The total increase in social financing for the first ten months amounted to 31.19 trillion yuan, 2.33 trillion yuan more than the previous year. At the end of October, broad money (M2) grew by 10.3% year-on-year, the same as the end of the previous month and 1.5 percentage points lower than the same period last year. Narrow money (M1) grew by 1.9% year-on-year, 0.2 and 3.9 percentage points lower than the end of the previous month and the same period last year, respectively. The gap between M2 and M1 was 8.4%, widening from 8.2% last month (see chart below).
3. The People’s Bank of China strengthens systemic risk innovation monitoring and analysis
The Central Financial Work Conference emphasized the need to promote high-quality financial development, comprehensively strengthen financial regulation, effectively prevent and resolve financial risks, and firmly guard against systemic financial risks. Following the principles of "stabilizing the overall situation, coordinating and planning comprehensively, implementing measures based on classification, and precisely defusing risks," the People's Bank of China is committed to combating significant financial risks, improving the financial stability mechanism, orderly resolving prominent risks with significant impact, urgency, and overall importance, thereby maintaining national economic and financial security and stability.
4. Wenzhou achieves the first "on-balance sheet" data asset transaction
In early October 2023, the data product "Credit Data Treasure" by Wenzhou City Big Data Operation Co., Ltd. completed data asset confirmation registration. The Wenzhou Municipal Finance Bureau announced that this was the first data asset confirmation registration in Wenzhou, and also the first publicly reported case in China of a finance-guided enterprise data asset going on the balance sheet. Going on the balance sheet means recognizing data resources as an asset on the company's balance sheet and reflecting its value in the financial statements.
Overseas Market
1. Israel claims Hamas has lost control of Gaza
On the 13th, Israeli Defense Minister Galant stated that as Israeli forces fully occupied Gaza City, the Palestinian Islamic Resistance Movement (Hamas) "has lost control of the Gaza Strip." Citing Galant, the Israeli Government Press Office said that Israeli troops are pushing forward and carrying out their tasks according to plan. Earlier in the day, the Israeli military issued a statement saying that since the beginning of its ground assault in the Gaza Strip, the Israeli Air Force and ground forces have conducted 4,300 attacks on Palestinian militant targets.
2. US debt interest soars by 87% year-over-year
The U.S. Treasury Department's new fiscal year budget deficit report showed a budget deficit of $66.6 billion for October, slightly above the expected $65 billion and a previous value of $171 billion in September, with last year's deficit at $87.9 billion. The U.S. budget deficit in October significantly decreased by about 24% year-over-year, but after adjusting for calendar differences, the deficit reduction percentage was 4%. Notably, the interest paid on its debt by the U.S. in October surged year-over-year, with the public debt interest for the first month of this fiscal year being $88.9 billion, an 87% increase over October 2022.
3. Russian oil prices return to near the cap sanctions limit
After three consecutive weeks of declines, benchmark Brent crude oil prices hovered around $81, as traders awaited several reports to confirm whether the recent decline in oil prices was excessive. The fall in prices has brought Russia's flagship Urals crude back to the $60 per barrel range, with estimates for Urals crude at seaports on the Baltic coast dropping to a low of $66.19 per barrel last week, the lowest since July 25, breaking through the $60 per barrel price ceiling cap sanctions set by the G7 earlier (see chart below).
4. Europe starts to draw on natural gas storage
With colder weather and increased heating demands, European traders began drawing on record levels of natural gas storage this week. According to data from Gas Infrastructure Europe, as of November 8, the EU's natural gas storage reached 99.57%. Over the past few days, most EU countries started to net withdraw their stored natural gas, marking the first time European gas storage has seen a continuous net decrease since April (the end of the last winter heating season).
Focus Today
Today, investors should keep an eye on the UK labor market report, Eurozone Q3 GDP, the Eurozone and German ZEW economic sentiment indices, U.S. CPI and core CPI, and other economic data. In addition, investors should pay close attention to the Israel-Palestine situation, the IEA monthly oil market report, and other risk events.
