May 16, 2023 - Fundamental Reminder

☆ 09:30 AUD RBA Meeting Minutes

You can pay attention to its view on the 25 basis points rate hike in May.

☆16:00 EUR France IEA Oil Market Report (MAY)

You can pay attention to the IEA's view on the oil market in the near future and the future market.

☆ 20:30 USD Retail Sales MoM (APR)

The market is currently expecting it to register 0.7%, which is a rebound from the previous value of -0.6%.

☆ Today and the following morning, a number of Fed officials will speak: at 20:15, the famous hawk, Cleveland Fed President Mester will speak; at 20:55, Atlanta Fed President Bostic will give opening remarks at an event; at 22:00, Fed Governor Barr will make a testimony statement at the House Financial Services Committee; at 22:30, Richmond Fed President Balkin will deliver a speech.

☆ A meeting between Biden and congressional leaders on the debt ceiling is tentatively scheduled for 3 p.m. Tuesday (3 a.m. BST Wednesday).

Market Overview

Review of Global Market Trend

On Monday, spot gold oscillated narrowly and was blocked several times at the $2,020 mark before finally closing up 0.28% at $2,016.44 per ounce. Spot silver moved in the same direction as gold, eventually closing up 0.52% at $24.09 per ounce.

The dollar index weakened, but still stood above the 102 mark, finally closed up 0.26% at 102.43; U.S. bond yields rose and then fell, the two-year U.S. bond yields more sensitive to the interest rate outlook rose to an intraday high of 4.031%, finally closed at 4.010%; 10-year U.S. bond yields stood above 3.5%, finally closed at 3.507%.

After three consecutive days of weakness, crude oil rose more than 1% on Monday. WTI crude oil fell to an intraday low of $69.39 in Asian trading, then rose strongly and recovered all the lost ground during the day, finally closing up 1.79% at $71.28 per barrel; Brent crude oil rallied to near $75, finally closing up 1.78% at $75.49 per barrel.

The U.S. Nasdaq closed up 0.66%, the Dow closed up 0.14%, and the S&P 500 rose 0.3%. Chinese stocks generally closed higher, with the Nasdaq China Golden Dragon Index closing up 4.0% and Alibaba closing up 3.4%. Regional banks strengthened, KBW Bank Index closed up 2.5%, Westpac Hopewell Bank closed up 17.5%, Alerans West Bank rose 12%.    

European stocks were mixed, Germany's DAX30 index closed up 0.02%; FTSE 100 index closed up 0.3%; Europe's Stoxx 50 index closed down 0.03%.

Market Focus

1. Fed official speeches - Balkin: current financial stability does not pose an obstacle to the potential need for inflation-fighting rate hikes. Bostic: rate cuts this year is not my basic expectation, may need to continue to raise rates but tend to pause. Kashkari: Inflation is too high but declining, the Fed has a lot of work to do. Goolsby: assess future data to decide on policy in June, last meeting was torn between raising rates or not.

2. Foreign media: France signed a statement to support Ukraine's NATO membership.

3. The U.S. will backfill 3 million barrels of oil war reserves in August, asking sellers to provide offers by the end of May.

4. Russia will raise oil export tariff to $16.2 per ton from June 1.

5. U.S. Treasury data showed that China increased its holdings of U.S. debt by $20 billion in March, ending seven consecutive months of reductions.

6. CME: Open interest in U.S. Treasury futures exceeded the previous high of 17 million contracts with a notional value of $2 trillion.

7. Debt ceiling-McCarthy: The two sides of the debt ceiling negotiations remain far apart. Yellen: again warned of possible default on June 1, more updates on default date next week.

8. Turkish election enters the second round of competition, the final election will be held on May 28. Turkish stock indexes plunged intraday triggering the meltdown mechanism and Turkish lira overnight offshore funding costs soared to over 400%.

9. Q1 large fund positions - Warren Buffett added 20 million shares of Apple, liquidated TSMC, BlackRock Q1 continued to increase its position in technology stocks, held Apple market value of $170 billion, Hillhouse Capital in the first quarter to increase the code of Chinese stocks, increased holdings of a number of technology companies.

Geopolitical Situation

Energy Situation：

1. Russia's maritime oil product exports in April decreased by 5% month on month.

2. Turkey's Urals crude oil purchases from Russia doubled month-on-month in the first half of May.

3. Russia will raise its oil export tariff to $16.2 per ton from June 1.

Food Situation：

1. Ukrainian Foreign Ministry official: Despite a slowdown, Ukraine exported 2.5 million tons of agricultural products through the grain corridor in April. No additional negotiations on the Black Sea Grain Agreement are planned for this week. The situation around the Black Sea grain corridor is uncertain.

2. Head of UN aid agency: We will continue our efforts to extend Ukraine's Black Sea Grain Agreement in the coming days.

MHMarkets

Institutional Perspective

01

Goldman Sachs

Goldman Sachs plans to open an office in Abu Dhabi.

02

SOCIETE GENERALE

The feeling of overvaluation of the US dollar will not be easily shaken off

On May 12th, Kit Juckes, Chief Global Foreign Exchange Strategist at Societe Generale, said that the intraday trend of the US dollar was acceptable, but its valuation was not. The rebound in the yen is only a matter of waiting for the Bank of Japan to take action. The current global economic or geopolitical conditions are insufficient to justify the US dollar holding onto most of its gains from 2021 to 2022. On a daily basis, positions, yield trends, geopolitical uncertainties, and economic data trends all indicate that the US dollar may remain within a narrow range for a period of time. However, the feeling that the US dollar is overvalued is not easy to get rid of. The rebound in the yen is just a matter of waiting for the Bank of Japan to take action, and this feeling is also the same.

03

MUFG

【Mitsubishi UFJ: Turkish Lira May Extend Decline if Erdogan Wins Election】

On May 15 -- The Turkish lira could weaken further if Turkish President Recep Tayyip Erdogan fails to win an absolute majority (support) in Sunday's election, which would make him the clear favorite for re-election in the May 28 runoff, Mitsubishi UFJ said. Lee Hardman, a foreign exchange analyst at Mitsubishi UFJ, said in a report that the continuation of unconventional policy settings, a rising current account deficit, rising inflation and lower foreign exchange reserves will all lead to a weaker lira after the elections are over and the dust has settled. He said the depreciation trend of the lira slowed down before this year's election, leaving room for “recovery of (previous) weakness”. The dollar is currently up 0.2% against the Turkish lira, to around 19.6596.