Cracks appear in Trump’s political foundation. Analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on November 18

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell, with the Dow futures falling 0.68%, the S&P 500 futures falling 0.57%, and the Nasdaq futures falling 0.72%. Germany's DAX index fell by 1.40%, Britain's FTSE 100 index fell by 1.37%, France's CAC40 index fell by 1.42%, and Europe's Stoxx 50 index fell by 1.46%.

2. Interpretation of market news

There are cracks in Trump’s political foundation, and domestic and foreign affairs are under pressure at the same time

⑴ Trump’s control over the Republican Party has shown signs of loosening, and he failed to prevent House Republicans from supporting a bill to release documents related to Epstein. ⑵ Efforts to redraw congressional districts in Indiana have stalled, with Senate Republicans refusing to eliminate filibuster rules. ⑶The sudden break with Georgia Representative Marjorie Taylor Greene was surprising. This once most staunch supporter has now parted ways with Trump. ⑷ Trump said he would sign legislation to release documents related to Epstein, but he was worried that the matter would distract from the Republican agenda. ⑸The Saudi Crown Prince visited the White House for bilateral talks, and Trump announced that he would sell advanced F-35 fighter jets to Saudi Arabia, indicating a xmmen.comprehensive restoration of relations between the two countries. ⑹ The United Nations Security Council passed a resolution supporting Trump’s Middle East peace plan and establishing legal authority for the International Stabilization Force and the Gaza Transitional Government. ⑺New York state officials joined forces with Wall Street executives to prevent a federal takeover of New York City, using San Francisco's successful model as an example to lobby Trump. ⑻ Lawyers for Federal Reserve Governor Lisa Cook gave a detailed defense on mortgage application issues, while Trump tried to accuse her of fraudgrounds for dismissal.

Global bond market differentiation: The advantage of U.S. bond yields is highlighted

⑴ The yield of 10-year U.S. Treasury bonds is at 4.104%, 140.6 basis points higher than German government bonds, with a clear interest rate advantage. ⑵ The U.S. 2-year yield reached 3.581%, and the spread with similar German bonds remained at 156 basis points. ⑶The British bond yield curve is inverted, with the 2-year yield exceeding the United States at 3.791%, but the 10-year interest rate spread reaches 184.2 basis points. ⑷The yield on Japanese government bonds remains low, with the 2-year maturity at only 0.923%, and the interest rate gap with U.S. Treasury bonds widened to 265.8 basis points. ⑸Risk pricing within the Eurozone is divided, with Italy’s 10-year yield 74.7 basis points higher than Germany’s. ⑹ Australia’s yield curve is steep, with the 10-year yield reaching 4.450%, reflecting its unique monetary policy environment. ⑺The current global bond market pattern shows that capital flows are affected by multiple factors, and the difference in yields is only one of them. ⑻ In the future, we need to pay attention to changes in the monetary policy paths of major economies. Any unexpected adjustments may trigger a revaluation of interest rate spreads.

Undervalued Europe: Economic undercurrents are surging

⑴ The Eurozone’s third-quarter GDP data generally exceeded market expectations, showing that economic resilience is underestimated by most investors. ⑵ Capacity utilization climbed to an 18-month high, and order volume hit a three-and-a-half-year high, reflecting a strong recovery in domestic demand. ⑶ Even amid the volatile trade environment, export performance remains resilient, with exports to the United States maintaining steady growth. ⑷Export volume in September increased by 4.7% month-on-month, setting the largest monthly increase since the epidemic, and external demand has picked up significantly. ⑸ The financial regulatory system should be pragmatically adjusted to provide a more flexible policy environment for corporate operations. ⑹ Optimize the carbon emission system to balance environmental protection goals and economic development and enhance industrial xmmen.competitiveness. ⑺Europe actively embraces artificial intelligence technology and injects new momentum into the upgrading of traditional industries. ⑻ These positive factors have not yet been fully priced in by the market, and future economic data that continue to exceed expectations may promote the revaluation of asset values.

The hedging storm has escalated in an all-round way: the triple warning behind the surge in U.S. debt

⑴ Swap spreads have widened moderately, the yield curve has shown a steepening bull market, and hedging transactions have pushed the 2-year Treasury yield down 4 basis points to 3.57%. ⑵ Federal Reserve Governor Waller issued a dovish signal on Monday, saying that the weak labor market supports an interest rate cut in December, raising the probability of an interest rate cut in December to 46.2%. ⑶ The number of people filing for unemployment benefits in the United States rose to 1.957 million in the week of October 18. The continued weak employment data strengthened expectations for policy easing. ⑷The selling pressure on Japanese bonds spread to the U.S. bond market, with the 40-year Japanese government bond yield jumping 8 basis points to 3.88%, a record high.

The Central Bank of Hungary stayed on hold, while Central and Eastern Europe held fast to high interest rates

⑴ The Central Bank of Hungary announced on Tuesday that it would keep its benchmark interest rate unchanged at 6.50% and maintain its current monetary policy stance. ⑵Overnight deposit interest rate remains at 5.50%, and collateralised loan interest rate remains stable at 7.50%. ⑶ This interest rate decision is in line with general market expectations and shows that the central bank is seeking a balance between inflation and economic growth. ⑷The current interest rate level is at a high level in Central and Eastern Europe, reflecting the country's continued vigilance against inflationary pressures. ⑸The central bank may be observing the effect of previous interest rate hikes and waiting for clearer signals of a fall in inflation before considering a policy shift. ⑹ xmmen.compared with other central banks, Hungary maintains a relatively hawkish stance to reserve policy space for future response to economic fluctuations. ⑺The market needs to pay attention to subsequent changes in inflation data, as any unexpected rise may delay the central bank's interest rate cut schedule. ⑻Investors should be wary of arbitrage opportunities and exchange rate fluctuation risks brought about by the divergence of monetary policies in the region.

Donohoe will resign as Irish Finance Minister and Eurogroup Chairman

Paschal Donohoe announced on Tuesday that he will resign as Irish Finance Minister and Eurogroup Chairman to take a job at the World Bank. The sudden decision means the Irish coalition government will lose one of its most experienced members. Donoghue first became finance minister in 2017. In January this year, he was reappointed as finance minister just after the election. Under his leadership, Irish public finances have become one of the healthiest fiscal systems in Europe. In July this year, he was elected for the third time as president of the Eurozone Finance Ministers Conference, a term that was supposed to last two and a half years. He will formally submit his resignation later on Tuesday, according to his spokesman.

Long-term Japanese bonds continued to be sold off on Tuesday as investors worried about government spending plans

Long-term Japanese bonds were sold off by investors for the second consecutive day due to concerns about Japanese Prime Minister Sanae Takaichi's expanding spending plans. At the same time, the Nikkei index fell sharply on Tuesday (18th), falling below the 50,000 mark for the first time in three weeks. The index closed at 48,702 points, down more than 3% from Monday's close. The decline in Japanese stocks followed a broader sell-off in New York stocks overnight as investors lowered their expectations for a rate cut by the Federal Reserve next month. "Typically when these risk-off events occur, they are initiated by the Fed and perpetuated by concerns about Japan," said Manish Kabra, chief U.S. equity and multi-asset strategist at Societe Generale.

A risk aversion storm swept the world: Risk assets encountered a wave of selling

⑴Risk aversion sentiment continued to heat up in overnight trading, and overseas risk markets generally fell, following the weak trend on Wall Street on Monday. ⑵The S&P 500 index fell about 20 points or 0.3%, and the European Stoxx 50 index fell 1.0%, showing that the European and American markets fell together. ⑶ The Asian market suffered a greater impact in early trading, with the Nikkei 225 Index plunging 3.2% and the CSI 300 Index falling 0.7%, highlighting regional differentiation. ⑷The 10-year Treasury bond futures rose by about 1/4 point, but the increase in German bonds was limited, and the spread between the United States and Germany narrowed 0.5 basis points to 140.8 basis points. ⑸The U.S. dollar index remained stable around 99.59, the Japanese yen rose slightly to 155.37, the euro fell to 1.1584, and the pound fell significantly to 1.3141. ⑹Gold price remains stable at 4048.31 US dollars, crude oil prices remained at 59.96 US dollars, and xmmen.commodities showed defensive characteristics. ⑺ Market volatility has increased significantly, and investors are switching from risky assets to safe-haven assets. In the future, we need to pay attention to the response of central banks to market turmoil. ⑻ This synchronized correction of global risk assets may trigger a chain reaction, especially putting pressure on leveraged trading and high valuation sectors.

The myth of the British inflation island is about to be shattered

⑴ Although the British inflation rate in September reached 3.8%, far exceeding the central bank's target, and the market expects the October data to rise to 4.2%, the author believes that British inflation may have peaked. ⑵The key reason is that as an open developed market, the UK’s inflation trend has always kept pace with the world, and has been highly consistent with the inflation levels of other developed markets for most of the past 25 years. ⑶ A stronger pound against the currencies of major trading partners usually means weaker inflation. The current moderate strength of the pound and stabilizing global inflation together constitute an ideal environment for British inflation to fall. ⑷The government-led adjustment of controlled prices such as railway fares and energy costs was the main reason for the previous high inflation, as evidenced by the jump in CPI at the beginning of the new fiscal year in April last year. ⑸ However, since May this year, the annualized CPI growth rate has dropped to 2.4%, closer to the central bank’s target. The 20% drop in oil prices in sterling terms and the drop in wage growth from 6.2% to 4.2% have created downward pressure. ⑹Potential risks include the depreciation of the pound against the euro, which may push up the prices of some imported goods, and the fact that xmmen.companies have not fully transmitted the impact of last year's increase in labor costs. ⑺If global inflation continues to ease, the UK will not be able to survive alone. Investors can pay attention to whether the budget on November 26 confirms this trend.

European banking industry faces "unprecedented" shock storm

⑴ The European Central Bank clearly warned on Tuesday that euro zone banks must be fully prepared for "unprecedented" shock risks that may cause serious chaos. ⑵ The central bank pointed out that banks are currently facing a new real environment, and shocks from Trump’s tariff remarks to cyber attacks will occur more frequently, requiring banks to maintain full vigilance without knowing the specific nature of the crisis. ⑶The response strategy requires four pillars: healthy capital buffers, updated technological infrastructure, active management consistent with financial realities, and deeper regulatory intervention. ⑷ Strengthening banks' ability to withstand political risks and uncertainties will become the top priority of the European Central Bank's supervisory work in the next three years, focusing on prudent risk-taking and adequate capital levels. ⑸ At present, the overall performance of the banking industry is solid, with resilience and good profitability, and asset quality remains stable. This is due to the stable economic growth environment and controllable inflation levels. ⑹ Investors need to pay close attention to changes in capital adequacy ratios of European banks. Any weakening of capital buffers may amplify the negative impact of future shocks.

Francon Credit's profit target triggered market disagreements

⑴Credit Agricole Group announced a new three-year plan, aiming to achieve a net profit of more than 8.5 billion euros in 2028. This expectation is 4% higher than the previous forecast of analysts at JPMorgan Chase. ⑵Profit growth will rely on its structured financial solutions industrybusiness and key account divisions, while providing support through its European expansion strategy. ⑶The bank plans to increase the proportion of business outside France from the current 55% to about 60%, and will launch a universal bank in Germany to accelerate its international layout. ⑷ Analysts pointed out that there are still uncertainties in its strategy in Italy. CAItalia is much smaller than its peers, and the xmmen.competition in the German market is quite fierce. ⑸ Despite announcing ambitious profit targets, the stock fell 1.8% on the day, showing that there are clear differences in the market on the ability to execute the strategy. ⑹ Investors need to focus on the bank's cross-border business expansion progress and changes in market share, as the European banking industry will face severe challenges in the consolidation trend.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1597, an increase of 0.04%. The price (EUR/USD) declined on the last trading day before the New York session, relying on the support of its EMA50, exhausting the positive opportunities that could help it resume and xmmen.complete the short-term bullish correction trend. On this basis, it represents the last chance to gain the required bullish momentum, accompanied by the beginning of relative strength indicators, after unloading their oversold conditions, forming a negative behavior, casting doubt on its willingness to rise.

GBP/USD: As of 21:20 Beijing time, GBP/USD fell and is now at 1.3147, a decrease of 0.05%. Pre-market in New York, (GBPUSD) price declined on the last trading day as the resistance stabilized at 1.3185, which represents a barrier to the continuation of the current corrective bull run. This decline was caused by an attempt to gain bullish momentum that might allow it to break above this resistance, relying on the support of its EMA50, taking advantage of its trades as well as the supportive trendline of this bullish trend.

Spot gold: As of 21:20 Beijing time, spot gold has risen and is currently trading at 4048.33, an increase of 0.07%. Pre-market in New York, (gold) prices rose on the last trading day in an attempt to recover its oversold status on the relative strength indicator, especially with the emergence of positive overlapping signals, but a full recovery is unlikely as it trades below the ongoing negative pressure of the EMA50, affected by the break of the secondary bullish trendline on a short-term basis.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 50.256, an increase of 0.14%. Pre-market in New York, (silver) prices surged in the final intraday session, supported by a positive overlay signal on the relative strength indicator, whichAfter reaching oversold levels, an attempt to recover previous losses unloads some of the oversold levels, hitting resistance at the EMA50, and is accompanied by a retest of the secondary bullish trend lines on a short-term basis.

Crude oil market: As of 21:20 Beijing time, U.S. oil rose, now trading at 60.030, an increase of 0.28%. Prices (crude oil) rose on the last trading day before the New York market opened, supported by positive signals emerging on the relative strength indicator, after reaching oversold levels, approaching the EMA50 in an attempt to find its short-term trend.

4. Institutional view

Institution: The Federal Reserve may cut interest rates in December and then slow down the pace of policy easing

Christian Lenk of the German Central Bank (DZBank) said in a report that the Federal Reserve is expected to cut interest rates by 25 basis points in December and then act more cautiously. The analyst predicts that this will be followed by only two more rate cuts of 25 basis points each in March and June.

Deutsche Bank expects rising inflation to push 10-year U.S. Treasury yields higher despite interest rate cuts. Lenk said that because DZB expects U.S. inflation to rise in the xmmen.coming quarters due to temporary tariff effects and large government deficits, "the long end of the yield curve is likely to move higher without terminal rates moving too far from current levels."

Deutsche Bank predicts that the 10-year U.S. Treasury bond yield will rise from the current 4.103% to 4.50% in the next three months and to 4.60% in six months.

The above content is all about "[XM Group]: Trump's political foundation has cracks, short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on November 18". It was carefully xmmen.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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