The 10-year US Treasury yield has fallen below 5%. Will the 5% risk-free yield weaken its siphoning effect on US stocks and gold?
I think the core logic still depends on whether Brent prices can return to a downward trend. If oil prices don't fall, the market expects the Fed to raise rates and maintain higher rates for longer. Coupled with the US stock market's Q3 earnings season valuation adjustments, more funds will buy 10Y and 30Y Treasuries.
Will funds continue to buy 10Y? That depends on whether the yield is attractive enough and how much yield the market can accept.
Around 5% is sufficiently attractive, but what about near 4.6% or 4.5%? In this era of high inflation, I don't think the market can accept buying US Treasuries at lower yields.
From the perspective of US policymakers, suppressing long-term bond yields temporarily alleviates risks in the bond market, but US stocks are also a pillar. They cannot let US stocks, especially tech companies, develop under high interest rates for a long time. The only way is to adjust policy as soon as possible.
Therefore, the dynamics after November will be very critical: whether the Iran issue can be resolved, whether Brent prices can be suppressed from falling. If these can be completed before December, then December can be buffered with dovish rate hikes or even no hikes, and then continue to maintain high rates while adjusting through data to guide the market back to a rate-cutting cycle!
Combining the previous judgment on gold, if gold holds at $3950 around the December rate hike, then the trend is stabilized and continues to be bullish! #10月FOMC临近，美联储暂停加息还有哪些变数？
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