New reports from US banks | 16 October 2020

#JPMorgan:

We are expecting an uptrend to develop in the new five-day period. Wall Street banks are on track for a record year of revenue from trading U.S. government-backed mortgage debt, amid a surge in demand - from the Federal Reserve in its battle against the pandemic, and from investors hunting yield. Buying mortgages in March was one of the best trading opportunities in mortgages since the last financial crisis. The trading boom is likely to provide a silver lining in an otherwise tough period for U.S. banks amid record low interest rates and rising bad debts. They start reporting third-quarter earnings next week, JPMorgan kicking things off on Oct. 13.

Trading recommendation: Buy 100.51 and take profit 102.59.

#SP500:

Conditions in short-term dollar funding markets remained stable. Overnight secured and unsecured rates continued to trade in narrow ranges near the interest on excess reserves rate. Forward measures of funding rates implied that conditions were expected to remain stable in coming months. Yields on Treasury inflation-protected securities fell, while longer-dated nominal Treasury yields increased modestly. The surplus of dollar liquidity will have a positive impact on the capitalization of the US stock market.

Trading recommendation: Buy 3480 and take profit 3525.

#HSI:

Positive macroeconomic statistics from China signal the continuation of the uptrend. The Caixin Services Purchasing Managers Index released earlier in the day, rose to 54.8 in September, against August’s reading of 54. The Composite PMI for September also signaled continued growth, though not at last month's rate, having dropped to 54.5 from the previous month’s 55.1 figure. Companies remained confident about the economic outlook. In September, the gauge for business expectations rose further into expansionary territory. Companies remained positive about the ongoing economic recovery and the effective control of the epidemic.

Trading recommendation: Buy 24500 and take profit 24840.