Should We Reconsider Buying Treasury Bonds?

Ivan_Gan
2023-10-31

The Palestinian-Israeli conflict continues and tends to expand. Generally speaking, things have not developed in the direction of calming down the incident, and it is possible that the Israeli-Palestinian conflict will develop into turmoil on the scale of the "Arab Spring" more than ten years ago, and the uncertainty of its impact on the world economy will become increasing.

At present, the relatively good news is that Chinese Foreign Minister Wang Yi's visit to the United States will bring hope for the first meeting of two largest economies in the future, and the warming of U.S.-China Relations will bring important thrust to the development of the world economy. So what opportunities do these events bring to investment?

First, the oil price is difficult to calm down

In the current world energy pattern, which primary energy can replace crude oil? No. Therefore, when there is a war in the Middle East, it is difficult to find a reason for the sharp drop in oil prices.

This is an unpredictable world pattern, and it can only be followed when it happens. With the passage of time, it is gradually approaching the time when I expected a big move in oil market.

It seems that the fundamentals are tilting towards bulls. Therefore, from the perspective of long-term investment, oil price will be an important observation object in the future. Perhaps $80 is an important low price in the future, so continue to focus on follow-up.

Second, it is difficult for the soaring gold price to have a reason to calm down in the short term

With the continuous escalation of the Palestinian-Israeli conflict, the risk aversion in the market has been difficult to fade, and the price of gold has only rebounded back to the price before the National Day.

If the important barrier of 2000 can't stop the rising trend of gold price, we can only expect the correction near the historical high of 2100. The Federal Reserve is no longer in a rate hike (at present, 99% of the interest rate probability thinks that the Federal Reserve will not rate hike in November), and regional conflicts make gold prices almost no bad news, so friends who expect to short should not worry, because the pulse market is difficult to deal with.

Third, US stocks ushered in an opportunity due to China-US detente

The decline of US stocks seems terrible, but as early as August, it has been emphasized to everyone that the current accelerated decline is very consistent with the technical characteristics. Fundamentally, we don't see any particularly bad news, so falling down is a staged opportunity, and I think the news of bottoming out is related to the possible first meeting between China and the United States in November.

As we all know, the heads of state meetings are basically agreed. If they are not agreed, there is no need to meet each other. The easing of China-US relations and joint efforts to save the economy are good for both China and the United States at present, and will naturally bring benefits to the stock markets of both countries. Therefore, as long as we meet, the stock markets of both countries are not pessimistic.

Technically, U.S. stocks have also reached the S&P 4000-4100 point that I expected before. Regardless of whether it will reverse, at least the rebound in the region is still worth looking forward to. Unless the escalation speed of the Palestinian-Israeli conflict exceeds expectations in the short term, the market should not panic too much.

4. China -US detente and buying US Treasury Bonds again?

For America, inflation, though stubborn and rising, at least does not cause social panic and dissatisfaction (after all, wages are rising). For the U.S. government, what is really uncomfortable is the continuous rise in the yield of U.S. bonds.

Although the current decline in long-term U.S. bonds is partly caused by the Federal Reserve throwing long bonds to buy short bonds, it is not enough to explain the rapid decline of long-term U.S. bonds. Therefore, how to control the yield of U.S. bonds is an important key. The detente between China and the United States is the exchange of interests between the two sides. It is very likely that the United States will expect China to buy US Treasury Bonds again, so as to alleviate the problem that the yield of US bond continues to fall.

Therefore, from this perspective, US bonds will be an important investment opportunity, and we suggest that everyone pay attention to it.

$NQ100 Index Main Connection 2312 (NQmain) $$Dow Jones Main Connection 2312 (YMmain) $$SP500 Index Main Connection 2312 (ESmain) $$Gold Main Connection 2312 (GCmain) $$WTI Crude Oil Main Connection 2312 (CLmain) $

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  • TofuQQ
    2023-11-01
    TofuQQ

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