Dear all,

I am Rachel Chen, the CEO and founder of MacroMicro. In recent months, we have witnessed heightened market volatility, primarily driven by the increase in bond yields. Before I delve into further analysis, I would like to invite you to celebrate MacroMicro's 8th anniversary with us. As a token of our appreciation, we are excited to offer you a special gift: Join MM Prime or use the free trial code PRIME7D to receive the MacroVision Dashboard for free.


Global stock markets were off to the races in the first half of October but stumbled towards the end of the month. As of October 27, US markets dropped 3.2%, European stocks declined 2.0%, and the Nikkei fell 4.1%. Furthermore, China’s CSI 300 index failed to find any momentum, enduring a sharp 3.9% downturn in October.

At the same time, US 10-year Treasury bond yields continued to climb, advancing nearly 0.5 ppt by the end of October and briefly reaching 5%, while short-term yields remained at 5.15%. The US dollar index strengthened to 107—the highest level since November 2022 —before retreating slightly to 106, where it fluctuated for most of the month. In terms of commodity markets, crude oil and copper prices pulled back moderately, while gold prices grew significantly as tensions flared in the Middle East due to the Israeli-Hamas war, which stimulated safe-haven demand.


Reflecting on our views for this year, it seems that most of our expectations have been met. For starters,the global manufacturing sector has stabilized and the latest TSMC quarterly results suggest the semiconductor cycle's trough is close (More Info). Meanwhile, US inflation and wage growth have tapered off, supply and demand dynamics in the job market are finding its equilibrium as seen through the Beveridge Curve steepening downward, and the unemployment rate remaining unchanged. Under these circumstances, the stock market saw significant gains in Q2 to Q3. So, if economic conditions have been relatively good and a number of our predications have been met, what's been behind the substantial volatility we are seeing in the market right now?

The most significant issue I've observed this month: Market volatility caused by the rise in bond yields.

I have observed that the significant market volatility in recent weeks has been largely caused by the ongoing rise in bond yields, and I thought it would be worth bringing this topic to the forefront of this month’s house view message for all our clients. The most significant difference to the market this time around is the resurgence in long-term bond yields, which has surpassed our expectations, and forced a simultaneous correction in both stocks and bonds.

It is important to note that the Israeli-Hamas war and U.S.-China trade tensions are not the primary causes of the increased market volatility. Instead, the main factor contributing to this volatility is the long-term treasury yields.

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