The British budget is brewing fiscal tightening, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on November 10

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all rose, with the Dow futures rising 0.45%, the S&P 500 futures rising 0.95%, and the Nasdaq futures rising 1.49%. Germany's DAX index rose by 1.96%, Britain's FTSE 100 index rose by 1.01%, France's CAC40 index rose by 1.48%, and Europe's Stoxx 50 index rose by 1.85%.

2. Interpretation of market news

The British budget is brewing fiscal austerity, and the scale of 40 billion pounds affects the market

⑴ Panson macro analysts predict that British Finance Minister Reeves will launch a 40 billion pound fiscal austerity plan in the budget. ⑵The plan includes dual measures of tax increases and expenditure cuts, which will double the UK’s original fiscal space. ⑶ Reeves has hinted that the income tax rate may be increased to ensure a source of fiscal revenue. ⑷ However, tax increase measures carry political risks and may erode public support for the government. ⑸The detailed design of fiscal policy is crucial to Bank of England policymakers and will affect the direction of monetary policy. ⑹ Analysts believe that this budget may have an anti-inflationary effect in the short term. ⑺If the income tax increase measures are not included, the anti-inflationary effect of the budget will be limited. ⑻The bond market's reaction to the fiscal plan deserves attention, as fiscal sustainability affects investor confidence. ⑼ The specific provisions of the budget will determine its differentiated impact on various sectors of the economy. ⑽ The market needs to balance the relationship between fiscal consolidation and economic growth, and avoid excessive tightening that inhibits economic vitality.

U.S. natural gas prices soared to an eight-month high

⑴ U.S. natural gas futures rose nearly 3% to about $4.45 per million British thermal units, the highest level since March and close to the December 2022 high. ⑵ Strong export demand and record operating volumes of LNG facilities pushed up prices. ⑶The average daily delivery volume of the eight major LNG plants so far this month is approximately 17.4 billion cubic feet, exceeding the October record. ⑷Exports are expected to grow further as Europe seeks alternatives to Russian natural gas and Asian buyers secure long-term supplies. ⑸ U.S. natural gas production has reached approximately 108.7 billion cubic feet per day, exceeding October levels, pushing inventories to approximately 4% above seasonal norms. ⑹ The U.S. Energy Information Administration predicts that supply and demand will reach new highs in 2025 and 2026, driven by a surge in power-hungry data centers and liquefied natural gas exports. ⑺Dry natural gas production is expected to exceed 107 billion cubic feet per day next year, and total consumption may be close to 116 billion cubic feet per day. ⑻Major shale areas such as the Marcellus, Utica, Haynesville and Permian are still the core drivers of growth.

European natural gas prices fell to a one-and-a-half-year low

⑴ European natural gas futures fell below 31 euros per megawatt hour, close to the lowest level since May 2024. ⑵ Stable LNG arrivals and strong Norwegian pipeline transportation ease seasonal demand shifts, while mild and windy weather suppresses demand. ⑶ The price of liquefied natural gas in North Asia has fallen, causing more supply sources to shift to Europe. ⑷ European LNG imports rose to 101.38 million tons in the first 10 months of this year, an increase of 16.75 million tons xmxyly.compared with the same period last year. ⑸Wind power generation remains strong and is expected to continue to be highly productive. ⑹The temperature is expected to return to normal levels from Friday. ⑺The EU gas storage filling rate is 82.61%, which is lower than the same period last year but continues to improve. The gap may narrow to about 10 percentage points this week.

Albania’s inflation rate fell slightly in October

⑴ Albania’s annualized inflation rate fell to 2.3% in October, from the previous value of 2.4%. ⑵The price growth of entertainment and culture slowed to 3.2%, that of alcoholic beverages slowed to 3.1%, and that of food and non-alcoholic beverages slowed to 1.6%. ⑶The price increase of medical care slowed to 0.5%, that of hotels and restaurants slowed to 2.4%, and that of education prices slowed to 2.0%. ⑷ Housing and utility price increases accelerated to 4.3%, and furniture and home maintenance price increases accelerated to 2.9%. ⑸ Clothing and footwear price increases accelerated to 1.8%, xmxyly.communications price increases accelerated to 1.1%, and transportation price increases accelerated to 0.5%. ⑹ Consumer prices increased by 0.1% month-on-month in October, significantly slower than the 0.7% increase in September.

The dawn of the shutdown triggered a reversal in risk appetite, and the interest rate market repriced

⑴ The U.S. Senate passed a procedural vote of 60-40 to advance the government restart bill, and market risk appetite rebounded significantly. ⑵Treasury bond hedging trade reversed, with 2- to 5-year spot bonds leading the decline, driving the swap interest rate curve to steepen. ⑶Despite rising money market rates, the sharp decline in SOFR futures partially offset the selling of short- and medium-term swaps.pressure. ⑷The 2-year swap spread narrowed 0.55 basis points to -21.75, and the 3-year swap spread narrowed 0.20 basis points to -26.00. ⑸ The change in the long-term interest rate spread was limited, with the 10-year interest rate remaining at -44.00, and the 20-year and 30-year interest rates slightly widening by 0.50 basis points. ⑹SOFR futures fell across the board, with steep changes from White to Blue contracts. ⑺The probability that the Federal Reserve will cut interest rates by 25 basis points in December has dropped to below 65% from 72% on Friday. ⑻ The pressure on government bond issuance continues, and the supply of US$125 billion in refinancing this week supports the flow of swap recipients. ⑼ The supply of investment-grade bonds is expected to be strong, with $35-45 billion in new issuance transactions expected this week. ⑽ The U.S. dollar index edged up 0.04% to 99.643, Brent crude oil rose 0.19% to $63.75, and gold hit a two-week high.

UBS predicts that European corporate profits will grow by slightly more than 8% in 2026

UBS strategists released a report predicting that European corporate profits are expected to grow by slightly more than 8% in 2026. This growth rate is in sharp contrast to the negligible growth in previous years. According to the analysis of the report, this positive outlook is mainly due to several key factors: the negative effects of strong currency and high energy prices that previously dragged down performance are fading, and at the same time, xmxyly.companies have a clearer understanding and grasp of potential tariff risks. Based on optimistic judgments on the improvement of corporate profits, UBS analysts further predict that the pan-European Stoxx 600 Index will rise to 650 points by the end of 2026.

Takaichi Sanae is seeking to start a new growth cycle for Japan through its first economic stimulus package

Japanese Prime Minister Takaichi Sanae is seeking to start a new growth cycle for Japan through its first economic stimulus package. To this end, an expert panel under her leadership recommended that the government should build a strong foundation for economic growth through "investments in crisis management and investment in growth." The core of the strategy is to focus on investing in 17 areas identified by Takaichi Sanae as critical to Japan's economic growth, including semiconductors, artificial intelligence, shipbuilding, defense industry, and key minerals. In terms of fiscal policy, Takaichi Sanae has signaled a shift to a more expansionary policy, but also emphasized that its policy will be "both responsible and expansionary." In addition, she said Japan was "only halfway" toward achieving stable inflation supported by wage growth, a statement that suggested she hoped the Bank of Japan would maintain a cautious pace in future interest rate hikes.

Brazilian inflation expectations are stable, and the high interest rate environment may continue

⑴ Brazilian economists maintain the IPCA inflation rate forecast for 2025 at 4.55%, which is xmxyly.completely consistent with previous predictions. ⑵The inflation rate in 2026 is expected to remain at 4.20%, indicating that the medium-term inflation outlook is stabilizing. ⑶The base interest rate Selic is expected to remain at a high of 15.00% by the end of 2025, and monetary policy will maintain a tightening trend. ⑷The interest rate is expected to be 12.25% by the end of 2026. Although it has declined, it is still high and loose.The process is relatively slow. ⑸The GDP growth in 2025 is expected to remain at 2.16%, and the pace of economic expansion is moderate. ⑹ The economic growth forecast for 2026 is 1.78%, indicating that analysts are cautious about medium- and long-term momentum. ⑺In terms of exchange rate, the real is expected to be 5.41 against the US dollar by the end of 2025, consistent with previous forecasts. ⑻The exchange rate is expected to remain at 5.50 by the end of 2026, reflecting the consensus judgment of moderate currency depreciation. ⑼The expectations of various economic indicators have not been adjusted, indicating that analysts believe that the current policy path is appropriate. ⑽ The pattern of high interest rates and moderate growth may continue, providing a relatively stable income environment for emerging market assets.

Fed Fed Daley emphasized the need to remain open to further interest rate cuts

⑴ San Francisco Fed President Mary Daley said that the Fed needs to guard against inflation risks, but it should not ignore the possibility of a productivity boom and faster non-inflationary growth. ⑵ Tariff-driven price increases have not spread to broader inflation. ⑶ As the labor market softens, the balance of risks has changed. ⑷Inflation has declined but remains at a high level. ⑸ Policies remain moderately restrictive, and the economy has remained resilient this year. ⑹ His xmxyly.comments did not send a new signal, and the December decision is still uncertain for the Fed. ⑺ As the U.S. government shutdown xmxyly.comes to an end, economic data may further expose labor market vulnerabilities and reinforce expectations for another interest rate cut next month.

The French 10-year government bond yield is basically flat

⑴ The French 10-year government bond yield is basically flat at around 3.45%, remaining near the highest level since mid-October, and following the overall trend of the European bond market. ⑵ The market is optimistic that the U.S. government shutdown may be xmxyly.coming to an end, and a rebound in risk appetite has driven improvement in market sentiment. ⑶The European Central Bank is expected to keep borrowing costs unchanged during the year. The deposit interest rate is currently expected to be 1.9% in December 2026, 1.95% in March 2027, and currently 2.0%. ⑷ Market pricing reflects a 40% probability of a 25 basis point interest rate cut in September 2026. ⑸ French budget negotiations continue, and the National Assembly has passed the revenue part of the 2026 Social Security Financing Bill. ⑹ The move allows lawmakers to move forward with review of key provisions, including the suspension of pension reform, a major concession made by Prime Minister Sebastian Le Corni to appease the Socialists and avoid a vote of no confidence.

Daly sends a dovish signal, and the Fed is open to cutting interest rates

⑴ Federal Reserve Chairman Daley said that policymakers need to remain open to further interest rate cuts, emphasizing the need to balance inflation and growth risks. ⑵ Daly pointed out that as the labor market softens, the balance of risks has changed and policies need to be adjusted accordingly. ⑶ The slowdown in employment growth may be mainly due to declining labor demand rather than supply constraints caused by immigration policies. ⑷Data shows that the average monthly number of new jobs in 2024 will be about 150,000, which has dropped to about 50,000 in the first half of 2025. ⑸ The slowdown in wage growth confirms the judgment that labor demand has weakened. This analysis is crucial to the decision to cut interest rates.. ⑹ Daly believes that tariff-driven price increases have not triggered broader inflation, and the impact is mainly limited to the field of xmxyly.commodities. ⑺The Federal Reserve has cut interest rates by 25 basis points at each of its last two meetings, and now needs to assess the main risks facing the U.S. economy. ⑻The key question is to judge whether to continue to guard against inflation risks or to embrace the AI-driven productivity boom. ⑼ Daley emphasized the need for an open mind in policy formulation and an in-depth analysis of the evidence on both sides of the debate. ⑽ Although it did not explicitly support an interest rate cut in December, its analysis provided a theoretical basis for subsequent easing policies.

U.S. nuclear power policy attracts huge investments, and European xmxyly.companies turn to new projects worth 1.6 billion euros

⑴Newcleo, an Italian small modular reactor start-up, is considering developing 20 nuclear reactors in the United States instead of the UK as previously planned. ⑵The project has a valuation of up to 16 billion euros, showing the huge appeal of the US nuclear power market. ⑶ The xmxyly.company's CEO said recent policy changes have opened up opportunities for investment, pointing directly to the executive order signed by the Trump administration in May. ⑷The executive order aims to promote domestic nuclear energy production by cutting regulations and speeding up license approvals. ⑸ This investment shift marks a significant improvement in the xmxyly.competitiveness of the United States in the field of advanced nuclear energy technology. ⑹Small modular reactors, as the next generation of nuclear power technology, are becoming an important direction for global energy transformation. ⑺ The choice of xmxyly.companies to transfer investment locations reflects the direct impact of various countries’ policy environments on clean energy investment. ⑻The investment scale of 1.6 billion euros will significantly promote the development of the US nuclear power industry chain and create a large number of job opportunities. ⑼ This case may trigger a demonstration effect and attract more international energy xmxyly.companies to re-evaluate their investment layout in the United States. ⑽Investors should pay attention to new energy policy trends in various countries, which will become a key variable affecting investment decisions in related industrial chains.

Israel and India signed a memorandum of understanding on defense cooperation

⑴ Amir Baran, Director General of the Israeli Ministry of Defense, and Rajesh Kumar Singh, Secretary of the Indian Ministry of Defense, signed a memorandum of understanding last week to strengthen cooperation in the defense field between the two countries. ⑵According to reports from the Indian Defense Research website, a delegation from the Indian Ministry of Defense recently secretly visited Israel and reached an agreement involving missile procurement and production. ⑶According to the agreement, India will be able to purchase Israel Aerospace Industries' "AirLora" ballistic missiles and Rafael Advanced Defense Systems' "IceBreaker" cruise missiles, and will have the right to produce these missiles on its own.

Germany plans to approve a defense procurement plan worth more than 3 billion euros

⑴ According to media reports, Germany is about to approve a defense equipment procurement plan worth more than 3 billion euros, including the purchase of 20 additional military helicopters from Airbus. ⑵ It is reported that the procurement contract that will be approved by parliament this week also includes the purchase of 100,000 sets of night vision goggles from the German xmxyly.company Hensoldt and the London-listed xmxyly.company Theon International, with an order value of approximately 1 billion euros. ⑶ It was also disclosed that the German Ministry of Defense is planning to purchase an IRIS-TSLM air defense missile system worth 1.2 billion euros from Deere Defense.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1578, an increase of 0.12%. Prices (EUR/USD) rose on the last trading day in the New York pre-market, supported by the EMA50, and after unloading its overbought conditions, began to cross positively on the relative strength indicator, opening the way to realize these gains and strengthening the chances of extending these gains on a short-term basis.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3184, an increase of 0.16%. Pre-market in New York, (GBPUSD) price declined in the last trading session, struggling with the stability of the key resistance at 1.3155 to collect gains from its previous rise and try to gain bullish momentum that may help break through this resistance, in addition to trying to offload overbought conditions on the relative strength indicator, especially in the event of a negative crossover. The price relied on support from its EMA50, with a strong bullish correction wave dominating the session.

Spot gold: As of 21:20 Beijing time, spot gold has risen and is currently trading at 4102.30, an increase of 2.52%. Pre-market in New York, (gold) prices extended gains on the last trading day, breaking above the key resistance of $4,050, supported by positive signs from the relative strength indicator, which continued despite reaching overbought levels, as dynamic pressure represented by exchanges above the EMA50, dominated by a small bull run and trading along the trend line on a short-term basis.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 50.119, an increase of 3.73%. Pre-market in New York, (silver) prices continued to rise at intraday levels in the latest session, breaking the key resistance of $49.40, supported by its continued trading above the EMA50, and trading dominated by the main bullish trend and short-term secondary trend lines, in addition to positive signals on the relative strength indicator, despite reaching overbought levels.

Crude oil market: As of 21:20 Beijing time, U.S. oil rose, now trading at 60.020, an increase of 0.47%. Pre-market, in the latest intraday trade, (crude oil) prices fell as it hit resistance at its EMA50 while testing a major trend on a short-term basisA bearish trend line has intensified the downward pressure on the price, although the Relative Strength Index has emerged as a positive signal, indicating that negative momentum remains strong.

4. Institutional view

Citi: Japan’s 30-year government bond yield is expected to remain range-bound

Tomohisa Fujiki of Citi Investment Research said in a report that the xmxyly.compound yield on the 30-year Japanese government bond may remain in the range of 3% to 3.2% in the future. "We believe the reduction in issuance size will provide support for ultra-long bonds regardless of the budget size," the strategist said. Citi expects the size of each 20-year and 30-year JGB auction to be reduced by 100 billion yen, and expects the pace of 40-year JGB issuance to slow next year. Markets will likely continue to be influenced by developments in the United States, but with the July-September GDP contraction confirmed, markets should be pricing in a December rate hike by the Bank of Japan, he said. According to data, the 30-year Japanese government bond yield rose 0.3 basis points to 3.136%.

Agency: Long-term U.S. Treasury supply pressure may intensify next year

LBBW's Elmar Voelker said in a report that supply pressure at the long end of the U.S. Treasury yield curve is likely to increase starting next summer to meet the U.S. government's continued high net financing needs. Guidance from the U.S. Treasury last week reiterated its intention to keep auction sizes unchanged "for several quarters." However, a new addition to the statement stated that the U.S. Treasury Department has begun preliminary considerations to increase the size of nominal coupon bonds and floating rate notes (FRN) auctions in the future. As the auction approaches, this trading week will be the first test of how bond market participants take the message. The senior fixed income analyst said: "We believe that below-average investor demand may once again fuel the recent bearish trend in the bond market."

The above content is about "[XM Foreign Exchange Decision Analysis]: The British Budget is brewing fiscal austerity, and the short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on November 10" was carefully xmxyly.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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