MHMarkets：August 24, 2023 - Fundamental Reminder

☆20:30 USD Initial Jobless Claims (AUG/19) & USD Durable Goods Orders MoM(JUL)

☆2023 FOMC Voting Committee, Philadelphia Fed President Harker will be interviewed by CNBC at 22:00 and the following day at 0:00 a.m.

☆TBD The 2023 Jackson Hole Annual Meeting of Global Central Banks will be held under the theme of “Structural Changes in the World economy”.

Market Overview

Review of Global Market Trend

On Wednesday, spot gold rose for a third straight session to a two-week high, hitting $1,920 an ounce before closing up 0.97% at $1,915.45, after data showed U.S. business activity came to a near halt and both the dollar and Treasury yields retreated from recent highs. Spot silver rallied strongly and ended up 3.98 % at $24.32 an ounce, its highest level since Aug. 2.

The dollar index as a whole showed an inverted V trend, approaching the 104 mark before turning sharply lower, erasing all the day's gains and ending down 0.222% at 103.38. Us bond yields pulled back sharply, with the yield on the 10-year Treasury at 4.198%.

International crude oil fell for a third straight session as demand concerns following weak global manufacturing data outweighed optimism over a larger-than-expected drop in U.S. crude inventories. WTI crude briefly lost the 78 mark before settling down 1.27 % at $79.03 a barrel. Brent crude settled down 1.01 % at $83.09 a barrel.

The three major U.S. stock indexes opened higher, with the Dow up 0.54 % , the Nasdaq up 1.59% and the S&P 500 up 1.1 % . The Nasdaq China Golden Dragon Index closed up 1.5%, Alibaba gained 2% and Zhihu fell 9% after its performance. Nvidia closed up 3% and rose as much as 10% in after-hours trading on the report.

European stocks were in the red across the board, with Germany's DAX30 index closing up 0.15%, Britain's FTSE 100 index up 0.68% and Europe's Stoxx 50 index up 0.15%.

Market Focus

1. The Russian aviation agency confirmed that Wagner leaders Prigozhin and Utkin were on the plane that crashed, killing all ten people on board.

2. India's Chandrayaan-3 spacecraft successfully landed on the moon.

3. The US is said to be in talks with Venezuela to ease oil-related sanctions.

4. India plans to ban sugar exports for the first time in seven years, government sources said.

5. Nvidia's results exceeded expectations across the board and rose 10% in after-hours trading.

6. BLS: The first estimate of U.S. nonfarm payrolls for the year ended March will be revised down by 306,000.

7. Deteriorating PMI data in Europe and the US - Markit manufacturing PMI for August came in at 47, below expectations of 49.3 and 49 previously; The preliminary eurozone services PMI for August came in at 48.3, a 30-month low; Germany's preliminary composite PMI for August came in at 44.7, while the U.K. 's manufacturing PMI for August came in at 42.5, both 39-month lows.  

Geopolitical Situation

Conflict Situation

1. Three civilians were killed after shelling in Russia's Belgorod region, the local governor said.

2. The Ukrainian air force said 11 of 20 Russian drones launched overnight were shot down.

3. Russian military: shot down three drones that tried to attack Moscow.

4. Moscow's mayor says a drone hit buildings in central Moscow and another drone was shot down in the Moscow region.

5. According to TASS: Moscow airport has resumed operations after a brief suspension of flights following a Ukrainian drone strike.

6. Zelensky: Will take back control of Crimea and all other parts of Ukraine; Against all odds, Ukrainian forces are advancing.

7. Ukrainian Interior Minister: Russia strikes Romne School in northern Ukraine, killing two people.

8. Russian Defense Ministry: Russia destroyed a drone in the Belgorod region.   

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：Services have worsened the economies of the eurozone and Britain】

August 23, Goldman Sachs said that from today's European PMI data, we draw three main conclusions. Firstly, growth momentum in the euro area appears to be weaker than expected due to a sharp deterioration in services activity. Today's weak eurozone data was attributed to a range of factors, including shrinking inventories, weak foreign demand and tight budgets for households and businesses. Second, while economic activity has weakened, underlying price pressures are becoming more persistent. This was particularly the case in Germany, where the services price component increased for the second month running. Third, growth momentum in the UK also appears to be slowing on the back of weaker demand, coinciding with an easing of inflationary pressures.

02

SOCIETE GENERALE

【SOCIETE GENERALE：If the preliminary August PMIs disappoint, the EUR/USD rally could come to an abrupt end】

August 22 - EUR/USD briefly recovered above 1.09, but the pair's recovery could be halted if the preliminary August PMI disappoint, Societe General Bank said. Eur/GBP, meanwhile, returned to the lower end of the range. News of the smaller-than-expected budget gap has inevitably revived speculation that growth-supporting tax cuts will be introduced in this autumn or spring's Budget, ahead of the 2024 election.

03

MUFG

The BOJ record pace of bond purchases increases the need to adjust yield curve control policies

The BOJ has bought government bonds at a record pace this year, which may be one factor prompting the bank to allow yields to fluctuate in a wider range in the near term, reducing pressure on it to keep long-term rates under control. The BOJ hasn't significantly reduced its bond purchases after widening the yield-curve band in December and last month, and the ramp-up after each change raises questions about whether the central bank is moving too slowly to adjust policy and would have to go too far to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at MUFG Morgan Stanley Securities, said that if the BOJ reduced its bond purchases, market participants would take it as a signal that it was close to exiting its easing policy, pushing yields higher and forcing it to buy more.