Global market interest rate fluctuations resurface

Last week, the net value of our USD class products rose by 7 basis points, while the HKD class rose by 14 basis points. The gains were mainly driven by a gradual recovery in market risk appetite and a narrowing of credit spreads. As the year-end approaches, market trading has been relatively subdued.
On Friday, the U.S. released the Personal Consumption Expenditures (PCE) Price Index, showing moderate inflation in line with expectations. Market expectations for a Fed rate cut in December remain above 90%. U.S. Treasury yields rose slightly last week, primarily due to spillover effects from rising yields in other developed markets. Bank of Japan Governor Ueda Kazuo signaled a hawkish stance for the first time on Monday, stating the need to weigh the pros and cons of rate hikes. The market expects the BOJ to raise rates by 25 basis points on December 19. The 10-year JGB yield rose from around 1.82% at the start of the weekend to 1.95%. Meanwhile, Canada reported strong employment data on Friday, adding 53K jobs, far exceeding the market's expectation of a 5K decline, while the unemployment rate fell to a six-month low of 6.5%. Canadian government bond yields surged by 12-20 basis points. Australia's 10-year bond yield also rose by 15 basis points last week, driven by high inflation and GDP growth in line with expectations. The market anticipates a possible rate hike by the Reserve Bank of Australia in 2026. Overall, long-term bond volatility in global developed markets remains high, with cyclical shifts underway.
Amid the current rate-cut environment and uncertain market conditions, we will maintain a flexible strategy and participate in multi-currency IPO subscriptions to enhance returns. Our annual target remains focused on relatively stable returns, deploying carefully selected credit instruments to seek rewards within a relatively certain framework.
Here’s a recap of last week’s macroeconomic data:

Initial Jobless Claims – 191K, previous 216K, expected 220K
PCE Price Index – 2.8%, previous 2.8%, expected 2.9%
ISM Manufacturing Index – 48.2, previous 48.7, expected 49
Next week’s focus: New Home Sales (Dec 8), Producer Price Index (Dec 8), Initial Jobless Claims (Dec 11).

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