US stocks plummeted, with the Dow turning negative for the year. The US long bond yield reached its highest level since 2007, and the US dollar continued to rise.

US job openings in August reached 9.61 million, far exceeding the expected 8.81 million. It increased by nearly 700,000 compared to the previous value, further tightening the labor market. This confirms investors' expectations that the Federal Reserve will face more pressure to maintain higher interest rates for a longer period of time.

Traders' bets on a 25 basis point rate hike by the Federal Reserve in November have slightly increased to 28%, while bets on another rate hike in December remain at 39%. Overall, the probability of no further rate hikes this year is about 54%, indicating significant uncertainty.

However, the futures market predicts a 42% chance of monetary policy easing in the first half of 2024, indicating concerns that maintaining high interest rates for a longer period of time could lead to an economic downturn. Both the US and European bond yield curves are showing a steepening "bear market".

Loretta Mester, a voting member of the FOMC and President of the Cleveland Fed, said that if the economy remains robust, she would support another rate hike this year. However, the US may have already reached or be close to peak interest rates. "The current issue is how long we need to maintain rates at a restrictive level."

Raphael Bostic, President of the Atlanta Fed and also a voting member next year, said that if inflation expectations remain stable, the Fed can afford to wait. "We are not in a hurry to raise rates or lower rates." He hopes that rates will remain stable for a "long period of time", but expects a rate cut towards the end of next year.

US Treasury Secretary Janet Yellen said she is "very optimistic" about the economic outlook. The US is on a path to fiscal stability and is closely monitoring interest rate conditions. Long-term interest rates may be higher than expected, but maintaining higher rates for a longer period of time is not set in stone.

ECB policymakers and chief economists have warned that inflationary pressures are not yet over, but they believe that interest rates are at a level that helps contain inflation. As long as necessary, rates should be maintained at a high level. Traders have completely abandoned their bets on another rate hike in Europe this year.

US stocks hit a four-month low, Dow turns negative for the year, Amazon falls 3.7%, Chinese tech index and US bank stocks both drop 2%

On Tuesday, October 3rd, as market expectations for a rate hike by the Federal Reserve increased, US long-term bond yields hit a new high in over a decade, leading to a significant decline in US stocks.

Within the first hour of trading, the Dow, which opened more than 100 points lower, fell nearly 300 points or over 1%, turning negative for the year 2023 and joining the trend of small-cap stocks turning negative for the year. Subsequently, US stocks fell across the board by 1%, and the "fear index" VIX rose to 20, the highest since May.

The Dow fell the deepest, down nearly 520 points or 1.5%, briefly falling below the 33,000 mark. The S&P 500 fell the deepest by 1.7%, with non-essential consumer goods leading the decline. The tech-heavy Nasdaq fell 2.2%, marking the largest decline since August 2nd, and small-cap stocks also fell by 2% at one point.

US stocks collectively closed near the day's low, with the Dow falling for three consecutive days to a four-month low since May 31, marking the largest single-day decline since March. The S&P hit its lowest level since June 1, and the Nasdaq ended its four-day rally to reach its lowest level since May 31. The Russell small-cap stocks fell for three consecutive days to their lowest level in five months since May 4:

The S&P 500 index fell 58.94 points, or 1.37%, to 4,229.45. The Dow fell 430.97 points, or 1.29%, to 33,002.38. The Nasdaq fell 248.31 points, or 1.87%, to 13,059.47. The Nasdaq 100 fell 1.83%, and the Russell 2000 small-cap index fell 1.69%.

US stocks hit a four-month low, with the Dow turning negative for the year, the Nasdaq leading the decline, and the S&P testing the 200-day moving average from below.

Goldman Sachs joined the ranks of Wall Street banks such as Morgan Stanley and JPMorgan Chase, fearing that high interest rates would further drag down US stocks. The reason is that the deviation between the S&P 500 index and the 10-year real interest rate is approaching the highest level in nearly 20 years, except for 2020.

Star tech stocks fell together. "Metaverse" Meta fell nearly 2%, Microsoft fell 2.6%, Google A fell more than 1%, all falling from a two-week high; Apple and Netflix fell nearly 1%, both approaching a four-month low again; Amazon fell 3.7% to a three-and-a-half-month low; Tesla fell 2.8% and closed down 2% after a three-day rally, breaking away from the highest level in a week and a half.

Chip stocks fell across the board. The Philadelphia Semiconductor Index fell 2.1%, falling below 3,400 points and retreating from a two-week high. However, Intel rose 0.6% to a two-week high; AMD and Nvidia both fell by about 3%, both falling from a two-and-a-half-week high, and Arm fell more than 1%, approaching a historical low.

AI concept stocks experienced another pullback. C3.ai fell 3%, approaching a four-month low, while SoundHound.ai also fell 3%, falling for two consecutive days from a one-week high. Palantir Technologies fell more than 6%, continuing to retreat from a one-month high, and BigBear.ai fell 3.6%, approaching a nine-month low.

In terms of news, Meta is considering charging around $14 per month for ad-free services to Facebook and Instagram users in the European Union, and its subsidiary Reality Labs will lay off employees. KeyBanc predicts that Nvidia will rise another 65% and raises its target price to $750, citing stable demand in China and the shift to higher-priced GPUs for increased revenue. Intel's stock price rose more than 2% after hours as it announced the formation of a programmable solutions group to operate as an independent entity. Microsoft announced that its Dall-e 3 AI application, which generates images from text descriptions, can now be used on the Bing search platform and Bing-Chat chatbot.

Popular Chinese concept stocks continue to fall in the US stock market. ETF KWEB fell 2%, CQQQ fell 1.7%, and the Nasdaq Golden Dragon China Index (HXC) fell 2.2%, hitting a two-week low for the second consecutive day.

Among the Nasdaq 100 constituents, JD.com fell more than 2%, Baidu fell nearly 3%, and Pinduoduo fell nearly 2%. Among other individual stocks, Alibaba fell more than 2%, Bilibili and Tencent ADR fell about 1%, and Li Auto fell 1.7%, approaching a three-month low. Xpeng Motors fell 3.7% and NIO fell 2%.

As interest rates soar, bank stocks have fallen 2% for two consecutive days. The industry benchmark, the Philadelphia Stock Exchange KBW Bank Index (BKX), hit a four-and-a-half-month low, and on May 4, it hit the lowest level since October 2020. The KBW Nasdaq Regional Bank Index (KRX) hit a three-and-a-half-month low, and on May 11, it hit the lowest level since November 2020. The SPDR S&P Regional Banking ETF (KRE) hit the lowest level since October 2020 on May 4. The "Big Four" banks in the United States all fell, with Bank of America falling about 3% the worst, and Goldman Sachs falling nearly 4%, dragging down the Dow.

Bank stocks have fallen 2% for two consecutive days, reaching at least a three-month low.

Other stocks with significant changes include:

"Tesla's rival" Rivian fell more than 8% to a one-week low, breaking away from its recent two-month high. Despite Morgan Stanley reiterating its overweight rating and optimistic about production and delivery targets, rising borrowing costs have raised concerns about weak demand for electric vehicles in the United States.

Eli Lilly plans to acquire cancer therapy developer Point Biopharma for $1.4 billion in cash, or $12.50 per share. Eli Lilly fell more than 2% to a two-month low, while Point Biopharma surged 85% to a nearly seven-month high.

One of the leaders in the sharing economy, Airbnb, fell more than 6% to a five-week low, marking the largest decline in nearly five months. KeyBanc downgraded its rating from "overweight" to "neutral," citing a cooling travel demand after the pandemic, which will squeeze the company's profit margins.

However, HP rose nearly 2% against the trend, breaking away from a one-year low. Bank of America upgraded its rating from "sell" to "buy" for HP, citing improved prospects for personal computers (PCs), strong fundamentals, and attractive valuation. The stock has fallen 23% from its high in July.

European stocks fell about 1% for two consecutive days. The pan-European Stoxx 600 index fell 1.10%, hitting a new low for over half a year since March 24. All sectors fell together, with heavily indebted utility stocks falling 2.7% and mining stocks falling 2.6% under the influence of high interest rates. Major stock indices in major countries fell by more than 1%, with only the UK stock market, which is dominated by exporters, experiencing a smaller decline due to the depreciation of the pound.

Yields on US and European Bonds Rise, 10-Year and 30-Year US Bond Yields Reach Highest Level Since 2007

US bond yields have risen again, with long-term bond yields showing a significant upward trend. Bridgewater Associates predicts that the 10-year US bond yield, as the "anchor of global asset pricing," will rise to, or even break through, the 5% mark.

The two-year US bond yield, which is more sensitive to monetary policy, rose the most by 4 basis points to 5.15%, recovering from the decline since last Wednesday. The 10-year benchmark bond yield rose by more than 13 basis points and broke through 4.80%, while the 30-year long-term bond yield rose by 15 basis points to 4.95%, reaching the highest level in sixteen years since 2007.

Double-digit jump in 10-year and 30-year US bond yields, reaching the highest level since 2007

The five-year US bond yield rose by nearly 9 basis points and broke through 4.80%, reaching the highest level since July 2007. The yield on the US 30-year Treasury Inflation-Protected Securities (TIPS), which measures real interest rates, rose above 2.5%, reaching a new high since 2008. The spread between the two-year and 10-year key US bond yields narrowed to 35 basis points, the narrowest since March of this year. The average interest rate for 30-year fixed-rate mortgages is close to 8%.

US bond yields "steepen in bear market," indicating market expectations of higher interest rates for a longer period of time

Some analysts pointed out that in addition to the increasing expectations of the Fed's interest rate hikes, the expanding federal budget deficit will lead to bond supply exceeding demand, thereby requiring higher yields to attract investors to hold bonds, which has kept US bond yields high in recent days.

The 10-year benchmark German bond yield in the eurozone rose by more than 4 basis points to approach 2.97% at the close, approaching the highest level since July 2011 touched last Thursday at 2.98%; the two-year yield fell by 2 basis points to 3.21%, reaching the highest level since July 2008 when it touched 3.39%.

The 10-year benchmark Italian bond yield, which has a higher debt burden than peripheral countries in Europe, rose by more than 5 basis points to approach 4.98%, reaching the highest level since 2012. At the same time, the 10-year UK bond yield rose by 3 basis points to approach 4.60%, with a relatively smaller increase in the two-year yield. The yield on Canada's 10-year government bond has reached 4.25% for the first time since 2007.

Analysts believe that this is mainly due to persistently high inflation, as policymakers in Europe and the United States continue to rule out the possibility of interest rate cuts. However, concerns about a recession still lead the market to price in the European Central Bank's first interest rate cut in July next year. Nordea, a Nordic bank, believes that the significant increase in long-term bond yields and the steepening of the yield curve for US and European bonds indicate that the market believes interest rates will remain high for a longer period.

After falling more than 1%, oil prices rebounded and stopped falling for three consecutive days, breaking away from a three-week low, with Brent briefly falling below $90

Oil prices rebounded during the US stock market session, on the eve of the OPEC+ meeting to discuss production decisions. WTI November futures rose $0.41, or 0.46%, to $89.23 per barrel. Brent November futures rose $0.21, or 0.23%, to $90.92 per barrel.

WTI crude oil initially fell by $1 or 1.2%, breaking below $88 per barrel to the lowest level since September 12, before rebounding and rising above $89. Brent also fell by more than $1.10 or 1.3%, briefly falling below the psychological level of $90 per barrel to the lowest level since September 8, before rebounding and returning to $91. Both prices stopped falling for three consecutive days and broke away from a three-week low.

After falling more than 1%, Brent briefly fell below $90

The European benchmark TTF Dutch natural gas fell by another 6%, further away from the integer level of 40 euros per megawatt-hour, falling for six consecutive days to a four-month low. ICE UK natural gas also fell by more than 6% and approached 90 pence per therm. However, US natural gas rose by 4% and returned to a nearly two-month high.

The US dollar hits a ten-and-a-half-month high again, the yen quickly rebounds after falling below 150, and the offshore renminbi briefly falls below 7.33 yuan

After the release of the US JOLTS job vacancy data, the DXY, which measures the US dollar against a basket of six major currencies, rose by 0.4% to stand above the 107 level, reaching a ten-and-a-half-month high since November last year. It has risen for 11 consecutive weeks.

The US dollar hits a ten-and-a-half-month high and falls below the 107 level again at the end of the session

There is a divergence in the economic and central bank policy trends between Europe and the United States. The euro against the US dollar fell the most by 0.3%, further away from 1.05, reaching the lowest level in ten months since early December last year. The pound fell the most by 0.3%, further away from 1.21, reaching the lowest level in nearly seven months since mid-March. The Japanese yen briefly fell below the 150 mark against the US dollar, the first time since October last year, before quickly rebounding and rising 0.6% to break through 149. However, it still hovers around a one-year low. The Australian dollar has fallen 1% for two consecutive days to an 11-month low. The Russian ruble briefly fell below the 120 mark.

Some analysts believe that the yen's drop below 150 was immediately followed by a rebound, with a rapid surge of nearly 2% in just a few seconds, reaching a high of 147.43 yen against the US dollar. The market suspects that the Japanese authorities may have intervened in the foreign exchange market.

The offshore renminbi briefly fell below 7.33 yuan, a decrease of more than 90 points from the previous day's closing, hovering at a three-week low, and trading around 7.32 yuan in the US stock market. Other non-US currencies have also generally fallen, with the MSCI Emerging Market Currency Index wiping out all gains since the beginning of 2023.

Mainstream cryptocurrencies have generally fallen. The largest cryptocurrency, Bitcoin, has fallen more than 1%, falling below the $28,000 mark again, deviating from its six-week high. The second-largest cryptocurrency, Ethereum, still hovers around the $1,650 mark, having experienced double-digit declines in the third quarter.

Gold and silver have hit near seven-month lows, with spot gold hovering around $1,820 and copper prices falling below $8,000 for the first time in four months.

The rise in the US dollar and US bond yields continues to suppress commodity prices. COMEX December gold futures fell 0.31% to $1,841.50 per ounce, while silver futures fell 0.2% to $21.377 per ounce, both hitting their lowest levels in over six months for two consecutive days.

Spot gold fell more than $12 or 0.7%, briefly falling below the $1,820 mark, hitting a seven-month low since March 5, and experiencing a seven-day consecutive decline, the longest bearish period since August last year.

Spot silver, which fell more than 4% yesterday, briefly fell 1.7% and briefly fell below the $21 mark, hitting the lowest level since mid-March. Spot platinum, which fell nearly 3% yesterday, fell 1% again, hitting a one-year low.

London industrial metals continue to fall, but the decline is significantly narrower than the previous day:

"Dr. Copper," the economic barometer that fell 2.6% on Monday, fell another 0.6%, approaching the $8,000 mark, falling for three consecutive days to a four-and-a-half-month low, and briefly falling below $8,000 for the first time since May. LME aluminum, which fell more than 1% yesterday, fell another 1.3% today, breaking below $2,300, marking a two-day consecutive decline from its five-month high. LME zinc, which fell 1.8% yesterday, fell another 3.8% today, approaching $2,500, further deviating from its five-month high. LME lead, which fell more than 1% yesterday, fell another 1.3% today, hitting a seven-week low. LME nickel remained stable, hovering around its two-year low since October 2021. LME tin, which fell 1.9% yesterday, rebounded by 1.5%, moving away from its six-month low.

According to analysts, the expectation of further increase in LME inventory and the surge in the US dollar have intensified concerns about the demand for industrial metals. LME copper inventory has risen by more than 200% since mid-July, reaching its highest level since May last year, leading to a record high in futures premiums. Nickel inventory in LME warehouses has also reached a six-month high, while tin and lead inventories have been rising, all indicating weak demand.