Core Insights - A potential dollar rebound is emerging against the backdrop of widespread market expectations for a weaker dollar, driven by signals from the yen, euro, and options markets [1] Group 1: Yen Dynamics - The yen's recent performance is breaking historical norms, as it has not recovered from a significant drop at the start of the week, marking the longest consecutive rise for the dollar against the yen this year [2] - Market sentiment is pressured by Japan's wage growth slowing to its lowest level in three months, prompting investors to adjust their positions [2] Group 2: Euro Weakness - Political risks in France, particularly following the sudden resignation of Prime Minister Le Maire, have led to a significant decline in the euro's upward momentum [3] - The market's short positions on the euro have reached a one-month high, indicating a loss of investor confidence and a shift in market narratives [3] Group 3: Federal Reserve Influence - The dollar is gaining support from domestic factors, as several Federal Reserve officials have publicly countered aggressive rate cut expectations, bolstering the dollar's position [4] - The unexpected impact of the U.S. government shutdown and delays in economic data releases has also contributed to the dollar's strength, contrary to typical trends during such events [4][5]

Group 1 - The overall market trends for the past week aligned with previous expectations, with the US dollar, US Treasury yields, and crude oil showing rebounds, while US stocks experienced a slight decline [2][25] - Key US economic indicators showed resilience, including initial jobless claims dropping to 218,000, below the expected 233,000, and PCE inflation aligning with forecasts [3][4] - The Citigroup US Economic Surprise Index rebounded significantly, indicating a strong economic backdrop, although short-term interest rates lag behind the improving fundamentals [5][10] Group 2 - Upcoming focus for the market includes the US labor market, with significant data releases such as ISM Manufacturing PMI and non-farm payrolls expected to show notable rebounds compared to September [7][10] - The US dollar and interest rates are expected to continue their upward trend, with short-term rates rebounding from 2.9% to 3.17% [11][10] - The Federal Reserve's dot plot suggests potential rate cuts in 2025, with a reasonable range for US interest rates projected between 3.25% and 3.5% [13][15] Group 3 - US stock markets faced selling pressure from hedge funds, attributed to profit-taking and quarterly rebalancing, but this pressure is expected to ease as October approaches [20][21] - The upcoming earnings season is crucial, with market expectations for earnings growth around 6%, lower than the previous quarter's 11% growth, indicating a potential for positive surprises [24][23] - The current market valuation has increased, with forward P/E ratios rising from 21 to 23, suggesting that further upward movement in stock prices will require earnings growth to support valuations [23][25]

Core Viewpoint - The discussion around a potential bubble in the market is increasing, but Bank of America strategist Michael Hartnett indicates that the credit spread of tech stocks is at a multi-year low, suggesting that the AI-driven tech stock rally has not yet reached a dangerous level [1][4][5]. Group 1: Credit Spread and AI Bubble Concerns - The current credit spread for tech stocks is at its lowest point in 18 years, indicating that investors are not pricing in potential risks for tech companies in the credit market [4][5]. - This low credit spread contrasts sharply with typical late-stage asset bubble scenarios, which usually see a sharp rise in credit risk [5][6]. - The EPFR fund flow data supports this optimism, showing significant inflows into various asset classes, including $24.7 billion into bond funds and $19.6 billion into equities [6][7]. Group 2: Dollar Strength and Market Risks - Hartnett warns that the primary risk for investors is not a bubble burst but an unexpected strengthening of the dollar, as the consensus trade of "shorting the dollar" has become prevalent [1][11]. - If the dollar index experiences a chaotic rebound and surpasses the critical level of 102, it could trigger a collective risk-off response among investors [11]. - Despite the short-term risk of a dollar rebound, Hartnett believes the long-term trend of dollar depreciation remains unchanged, providing structural support for assets like gold [12]. Group 3: Asset Performance and Market Dynamics - Year-to-date, gold has been the best-performing asset with a gain of 41.3%, while international stocks have risen by 24.7% and the dollar index has declined by 9.2% [8][9]. - The negative correlation between a weakening dollar and rising risk assets is evident, suggesting that as long as the consensus trade of "shorting the dollar" remains intact, the macro environment for asset appreciation will continue [11]. - Although gold is currently viewed as "overbought" tactically, it remains a "underweight" asset structurally, with only 0.4% of private client assets and 2.4% of institutional client assets allocated to gold [12].

Group 1 - Gold prices have surged to a historic high, breaking the psychological barrier of $3,800 per ounce, driven by multiple factors including U.S. inflation data aligning with market expectations and geopolitical tensions increasing demand for safe-haven assets [1] - The market anticipates an 88% probability of a rate cut by the Federal Reserve in October and a 65% probability for another cut in December, which enhances the attractiveness of gold as a non-yielding asset [2] - The Japanese gold market leader, Tanaka Kikinzoku Kogyo, has raised its gold sales price to 20,018 yen per gram, surpassing the 20,000 yen mark, reflecting the impact of the Fed's potential rate cuts and the depreciation of the yen [2] Group 2 - Political uncertainty in the U.S. due to potential government shutdown if Congress fails to agree on funding could provide additional support for gold prices [3]

Core Viewpoint - The recent U.S. inflation data met expectations, strengthening market bets on potential interest rate cuts by the Federal Reserve later this year, leading to significant increases in precious metal prices, particularly gold and silver [1][2]. Market Review - On the last Friday, spot gold saw a substantial rise, reaching above $3780 during intraday trading but ultimately closed up 0.31% at $3760.53 per ounce, marking a six-week consecutive increase [2]. - Spot silver also surged, breaking above $46 and hitting a 14-year high, closing up 1.98% at $46.06 per ounce, similarly recording six consecutive weeks of gains [2]. Key News Summary - U.S. personal consumption expenditures (PCE) have increased for the third consecutive month, with the core PCE price index remaining at a stubborn year-on-year increase of 2.9%, which is a key inflation indicator for the Federal Reserve [3]. - The consumer confidence index from the University of Michigan has dropped to a four-month low, indicating rising concerns over income [3]. - The precious metals market has continued its strong upward trend, with both gold and silver futures reaching historical highs, particularly silver, which has shown stronger momentum [3]. - As of September 26, the COMEX silver futures have surpassed the $46 mark, driven by market sentiment following anticipated interest rate cuts by the Federal Reserve [3]. - Economic data indicates a significant upward revision of the U.S. second-quarter GDP growth rate to 3.8%, up from a previous estimate of 3.3%, with consumer spending growth also revised upward [3]. - Despite the strong economic data supporting a rebound in the dollar, silver continues to reach new highs, suggesting a robust trend [3]. - Short-term expectations indicate silver may challenge the historical high of $50, with a forecast for increased volatility in the market [3]. - Mid-term target prices are set at $4000 for COMEX gold and $50 for COMEX silver [3].

Core Viewpoint - The current credit spread of tech stocks in the US is at an 18-year low, indicating that the AI-driven tech stock rally has not yet reached a dangerous level [1][4][6] - The primary risk in the market is not a bubble burst but an unexpected strengthening of the US dollar, which could trigger a collective unwinding of the consensus trade of shorting the dollar [3][10] Credit Spread Analysis - The credit spread is a measure of the additional yield on corporate bonds compared to risk-free government bonds, and a narrowing spread suggests low perceived default risk for issuing companies [6] - The current low credit spread for tech stocks indicates that investors are not pricing in potential risks for tech companies, contrasting with typical late-stage asset bubble scenarios where credit risk rises sharply [4][6] Market Sentiment and Fund Flows - Recent EPFR fund flow data shows a continued influx of capital into various asset classes, with $24.7 billion into bond funds, $21.3 billion into cash, $19.6 billion into stocks, $5.6 billion into gold, and $0.6 billion into cryptocurrencies, reflecting overall investor optimism despite discussions of potential market corrections [7] - The performance of gold, which has risen 41.3% year-to-date, contrasts with the US dollar's 9.2% decline, highlighting the negative correlation between a weakening dollar and rising risk assets [8][9] Dollar Dynamics - The depreciation of the dollar is identified as the core driver of the current asset price increases, with central banks globally having cut rates 168 times in the past year, injecting significant liquidity into the market [9] - The consensus trade of shorting the dollar poses a risk; if the dollar index unexpectedly rebounds and surpasses the critical level of 102, it could lead to a risk-averse collective unwinding of various consensus trades [10]

Core Viewpoint - The discussion around a potential AI bubble is intensifying, but Bank of America strategist Michael Hartnett believes that the current credit spreads for tech stocks indicate that the AI-driven rally has not yet reached a dangerous level [1][2] Group 1: Credit Spreads and AI Bubble - The credit spreads for tech stocks are at an 18-year low, suggesting that investors are not pricing in potential risks for tech companies, contrasting with typical late-stage asset bubble scenarios where credit risks rise sharply [2][3] - Hartnett asserts that a comprehensive collapse of the AI sector is unlikely due to the current credit market conditions [2] Group 2: Market Risks and Dollar Strength - The immediate risk for investors is not a bubble burst but rather an unexpected strengthening of the dollar, with a consensus trade of "shorting the dollar" being a significant vulnerability [1][4] - If the dollar index experiences a chaotic rebound and surpasses the critical level of 102, it could trigger a collective risk-averse response among investors [4] Group 3: Asset Performance and Market Sentiment - Year-to-date, gold has been the best-performing asset with a gain of 41.3%, while international stocks rose by 24.7%, and the dollar index fell by 9.2% [4] - Recent EPFR data shows a continued inflow of global funds into various assets, indicating that investors remain optimistic and are actively allocating to risk assets despite discussions of potential market corrections [3] Group 4: Gold's Position in Asset Management - Although gold is currently viewed as "overbought" from a tactical perspective, it remains a "low allocation" asset in both private and institutional asset management, with only 0.4% and 2.4% allocations respectively [5]

Core Viewpoint - The price of gold has reached historical highs following the Federal Reserve's interest rate cuts, with London gold hitting $3,791.08 per ounce, reflecting a significant market reaction to monetary policy changes [1] Group 1: Gold Price Movement - London gold's current price is $3,757.12 per ounce as of September 25, with a daily increase of nearly 0.4% [1] - The recent price adjustment is primarily driven by a rebound in the US dollar, which rose approximately 0.65%, reaching a near two-week high, making gold more expensive for holders of other currencies [1] Group 2: Market Analysis and Predictions - The commencement of the Federal Reserve's rate cut cycle is seen as a core driver for gold and silver prices, with expectations of two more rate cuts within the year [1] - Technical correction pressure exists for precious metal prices after consecutive highs, and hawkish signals from multiple Federal Reserve officials could lead to increased short-term volatility if profit-taking occurs among bullish investors [1]

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - Last week, the main contract price of Shanghai zinc futures declined. The Fed cut interest rates by 25BP, but Powell's speech was more hawkish than expected. The US retail data exceeded expectations, and the employment market improved, leading to a rebound in the US dollar and pressure on risk assets. In China, economic indicators in August generally declined, increasing the need for timely policy reinforcement [3][11]. - Fundamentally, the processing fees for domestic and imported zinc ores continued to diverge. The processing fee for domestic ores remained stable, while that for imported ores increased rapidly. In September, there were more regular maintenance activities in smelters, and the monthly output of refined zinc was expected to remain above 600,000 tons. On the demand side, the improvement in the prices of black - series products drove the sales of galvanized pipes. The operating rates of some end - user enterprises increased, but there were still differences in orders among different industries. Social inventories decreased slightly due to the decline in zinc prices and pre - holiday stocking demand [4][11]. - Overall, the Fed's interest - rate cut was in line with expectations, and the rebound of the US dollar pressured zinc prices. However, the increase in the operating rates of end - user enterprises, the enthusiasm for downstream price - fixing after the decline in zinc prices, and the pre - holiday stocking plans would limit the downward space of zinc prices [4][12]. 3. Summary by Directory Transaction Data | Contract | 9/12 Price | 9/19 Price | Change | Unit | | --- | --- | --- | --- | --- | | SHFE Zinc | 22,305 | 22,045 | - 260 | Yuan/ton | | LME Zinc | 2,956 | 2,898.5 | - 57.5 | US dollars/ton | | Shanghai - London Ratio | 7.55 | 7.61 | 0.06 | - | | SHFE Inventory | 94,649 | 99,315 | 4,666 | Tons | | LME Inventory | 50,525 | 47,825 | - 2,700 | Tons | | Social Inventory | 154,200 | 158,500 | 4,300 | Tons | | Spot Premium | - 60 | - 50 | 10 | Yuan/ton | [5] Market Review - The main contract of Shanghai zinc futures changed to ZN2511 last week, with the price oscillating downward and breaking below 22,000 Yuan/ton. The Fed's interest - rate cut was in line with expectations, but the rebound of the US dollar led to a withdrawal of long - position funds and a significant decline in zinc prices. The weekly decline was 1.28%. LME zinc first rose and then fell, with a weekly decline of 1.95% [6]. - In the spot market, as the zinc price declined, downstream customers increased price - fixing, and traders also increased shipments. However, in the second half of the week, downstream purchasing weakened, and the spot premium remained at a small discount [7]. - In terms of inventory, as of September 19, LME zinc inventory decreased by 2,700 tons to 47,825 tons, and SHFE inventory increased by 4,666 tons to 99,315 tons. As of September 18, social inventory was 158,500 tons [8]. - In the macro aspect, the Fed cut interest rates by 25 basis points, emphasizing the downward risk of employment and expecting two more cuts within the year. The US retail sales in August increased by 0.6% month - on - month, and the number of initial jobless claims decreased. The Bank of England maintained the interest rate at 4% and adjusted the quantitative tightening scale. The Bank of Japan maintained the benchmark interest rate at 0.5% [8][9]. - In China, the industrial added value in August increased by 5.2% year - on - year, and the total retail sales of consumer goods increased by 3.4% year - on - year. The fixed - asset investment from January to August increased by 0.5% year - on - year, and the real - estate investment decreased by 12.9% year - on - year [10]. Industry News - SMM data showed that the average processing fee for domestic zinc concentrates in the week of September 19 remained unchanged at 3,850 Yuan/metal ton, while the average processing fee for imported zinc concentrates increased by 12.5 US dollars/dry ton to 111.25 US dollars/dry ton [13]. - On September 17, Orion Minerals' subsidiary signed an agreement with a subsidiary of Glencore, obtaining a financing of 200 million - 250 million US dollars and a concentrate purchase agreement for the Prieska project. The company plans to start production at the PCZM project by the end of 2026 or early 2027 and aims to increase copper production to over 30,000 tons/year and zinc production to 65,000 tons/year after the two projects reach stable production [13]. Related Charts The report provides multiple charts, including the price trends of Shanghai and LME zinc, the ratio of the two markets, inventory changes, processing fees for zinc ores, and the operating rates of downstream enterprises, which visually present the market situation [15][17][19][20].

Group 1 - Gold has recently reached approximately $3,700 per ounce, driven by safe-haven demand, central bank purchases, and anticipation of U.S. Federal Reserve interest rate cuts [2] - Analysts are forecasting potential targets of $4,000 and even $5,000 for gold prices [2] - Historical trends indicate that gold is not immune to sharp downturns, raising concerns about a potential market crash [2][8] Group 2 - Historical instances of gold crashes include significant declines after peaks, such as a drop of nearly 65% from $850 in 1980 to below $300 by 1985 [3] - Another example is the decline of over 35% from nearly $1,920 in 2011 to approximately $1,200 by late 2013 [4] - During the pandemic, gold peaked at $2,070 in August 2020 but fell back below $1,700 by early 2021, representing an 18% drop [5] Group 3 - Current gold prices have incorporated an ideal scenario, but signs of potential trouble include a "hawkish cut" from the Fed, a stronger dollar, speculative overheating, and a potential pause in central bank purchases [7][9] - A 20-25% correction could bring gold prices down to $2,800-$3,000 per ounce, while a more severe 35-40% crash could test levels around $2,200-$2,400 per ounce [9]