Due to the U.S. September inflation data once again exceeding expectations, the market's bets on the Federal Reserve significantly lowering interest rates in the future have cooled down. The U.S. dollar has continued to strengthen, reaching its highest level since mid-August at one point. The three major U.S. stock indices all showed collective strength, and U.S. Treasury yields edged up slightly.

In terms of U.S. stocks, the earnings season started strongly, with all three major indices achieving five consecutive weeks of gains. Among them, the S&P 500 index rose by 1.11%, the Dow Jones Industrial Average rose by 1.21%, the Nasdaq Composite rose by 1.13%, and the Russell 2000 small-cap index rose by 0.98%.

Regarding European stocks, major stock indices across Europe mostly rose throughout the week, with the Stoxx Europe 600 index up by 0.66%; the German DAX index up by 1.32%; the French CAC index up by 0.48%; the Italian FTSE MIB index up by 2.13%; and the British FTSE 100 index down by 0.33%.

In the Asian market, influenced by Warren Buffett's plan to issue yen bonds for the second time this year, the Nikkei 225 index rose by 2.51% for the week. Following the Bank of Korea's initiation of a rate-cutting cycle this week, the Korean Composite Stock Price Index (KOSPI) rose by 1.37% for the week.

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In terms of the U.S. dollar, due to the release of the Federal Reserve's meeting minutes and inflation data, market expectations for rate cuts fluctuated significantly. The dollar overall trended upwards, with a weekly increase of 0.42%, closing at 102.925.

As the U.S. dollar strengthened, most non-U.S. currencies faced pressure. The U.S. dollar against the Japanese yen reached its highest level since August 2nd this week, approaching 149.6. The euro against the U.S. dollar fell by 0.35% for the week, hitting a new low since August 8th.

In the bond market, influenced by the persistence of inflation, the 10-year U.S. Treasury yield rebounded from around 3.7% in mid-September, rising to 4.11% before falling back to 4.08%, with a total weekly increase of 20 basis points (BP); the 10-year German bund yield rose by 12 BP for the week.

In the commodity market, international oil prices fluctuated significantly this week. At the beginning of the week, due to geopolitical factors, oil prices rose sharply to a six-week high. However, they subsequently fell sharply due to demand concerns and then rose again due to supply concerns caused by Hurricane Milton in the United States. West Texas Intermediate (WTI) crude oil rose by 1.49% for the week, and Brent crude oil rose by 0.95% for the week.

Affected by the strengthening U.S. dollar, the rise in gold prices has slowed. The main New York gold futures contract rose by 0.24% for the week, and spot gold rose by 0.13%. The main New York silver futures contract fell by 2.03% for the week, and spot silver fell by 2.05%.

Next week, several Federal Reserve officials will continue to speak, providing clues to the future path of Federal Reserve policy. The European Central Bank may continue to lower interest rates, and the U.S. third-quarter earnings season will still continue.European Central Bank Interest Rate Decision

The European Central Bank (ECB) interest rate decision is approaching. On Thursday, October 17th, Beijing time, at 20:15, the ECB will announce the latest interest rate decision. The market widely believes that the ECB's interest rate cut of 25 basis points in October is a "done deal," lowering the deposit rate to 3.25%, marking the first consecutive rate cut in this cycle.

Recently, several ECB policymakers have spoken, paving the way for further rate cuts. Villeroy, a member of the ECB's Governing Council and Governor of the Bank of France, stated on Wednesday: "There is a high likelihood of another rate cut next week, and it will not be the last one. The pace of rate cuts depends on how the fight against inflation evolves."

Nomura Securities predicted in a report that the ECB may start a series of rate cuts from October until June 2025, totaling 175 basis points.

Analysts at Deutsche Bank also said that the ECB's further rate cut next Thursday could signal that the bank is entering a faster easing cycle, expecting the ECB's deposit rate to drop to 2.25% by April 2025.

Analysts generally believe that after the Federal Reserve's 50 basis point rate cut in September, it opened up space for subsequent rate cuts by the ECB. From the recent statements of the ECB, slowing inflation and concerns about economic growth slowdown have become the key to the shift.

As the "engine" of the European economy, the German government recently downgraded its economic growth forecast for 2024, stating that Germany's GDP will contract by 0.2% this year, which could lead to Germany's first two-year economic recession since the early 21st century.

Danske Bank believes that if the ECB cuts rates by 25 basis points at the October interest rate meeting and leaves the door open for further rate cuts in December, the euro may continue its recent downward trend, and the euro against the US dollar may continue to face pressure in the short term.

US Q3 Earnings Season Underway

Wall Street investment banks JPMorgan Chase and Wells Fargo reported stronger-than-expected Q3 earnings on Friday, October 11th, officially kicking off the US Q3 earnings season. The growth rate of the two banks' performance showed resilience, driving their stock prices to rise on Friday.Next week, Goldman Sachs, Citigroup, and Morgan Stanley will successively release their financial reports. Among the non-financial sectors, chip manufacturing concept stocks ASML and TSMC will also be the focus of market attention.

Some views suggest that Wall Street currently expects the earnings of S&P 500 constituent companies to increase by 4.7% year-on-year in the third quarter, far lower than the 7.9% in the previous quarter, marking the lowest growth rate in four quarters. However, due to Wall Street's reduced expectations for US stock earnings, this also provides more room for corporate earnings reports to exceed expectations.

Trivariate Research founder Adam Parker stated that this time, the earnings season will be more important than usual, and we need specific data from companies. Investors are particularly concerned about whether companies are delaying expenditures, whether demand is slowing down, and whether customers are changing their behavior due to geopolitical risks and macroeconomic uncertainties.

Zhang Xinmao, a senior market analyst at Guotai Junan Research Institute, believes that US stocks often rise during the entire cycle of the Fed's preemptive interest rate cuts, but during the early stages of rate cuts when expectations are unstable, the index may remain volatile. Before the beginning of November, interest rate cut trades, recession pricing, and election trades will continue to be intertwined, disturbed by the release of US economic data and the progress of the election process. Market volatility is expected to remain high and will suppress the space for risk preference to rise and repair during the phase. US technology stocks, benefiting from interest rate cuts, are expected to rebound; the performance of US cyclical and value stocks is worth looking forward to, such as the S&P 500 index with better valuation cost-effectiveness, which has relatively higher certainty under any circumstances.