Mohicans markets ：MHM Today’s News

November 24, 2022-Fundamental Reminder

☆ 17:00 Germany publishes IFO Business Climate Index for November.

☆ 19:00 UK publishes differential of CBI Industrial Orders for November.

☆ 20:30 ECB publishes minutes of its monetary policy meeting.

☆ TBD EU energy ministers hold an emergency meeting.

MHMarkets -Market Overview

Review of Global Market Trend 

On Wednesday, November 23, the U.S. released mixed economic data; the dollar suffered an intraday selloff, with the dollar index falling to a daily low of 106.03 after the release of the Fed's dovish minutes and finally closing down 0.93% at 106.15. Non-dollar currencies such as the pound, euro and yen rose more than 1% against the dollar.

The 10-year U.S. bond yield fell through 3.7% and the 2-year U.S. bond fell to 4.47% intraday, narrowing back to 4.52% after the release of the FOMC minutes. On Wednesday, the 2/10-year U.S. bond yield inversion of more than 80 basis points again broke the record; 2/10-year German bond yield spread fell more than 8 basis points to a low of -23.241 basis points, which was the largest inversion since 1992; the British 10-year Treasury yield fell below 3% for the first time since Sept. 8.

Spot gold benefited from the decline in the U.S. dollar and U.S. bond yields, shaking up and breaking through the $1750 barrier after the release of the Fed minutes, closing up 0.55% at $1749 per ounce; spot silver broke through the $21 barrier again, closing up 2.15% at $21.53 per ounce.

The EU is negotiating a price cap on Russian oil or much higher than the cost of extraction, crude oil again staged a plunge; WTI crude oil once plunged more than 5% during the day, falling below the $77 mark during the day, closing down 4.52% at $77.44 per barrel; Brent crude oil forced under the $84 mark, closing down 4.36% at $84.53 per barrel. European benchmark TTF Dutch natural gas futures rose more than 8%, and U.S. NYMEX December natural gas futures once rose 12%.

The three major U.S. stock indexes ended the day maintaining gains as the minutes of the Federal Reserve meeting showed that several officials supported a slower pace of interest rate hikes. The Dow closed up 0.28%, the Nasdaq closed up 0.99% and the S&P 500 closed up 0.62%. The S&P 500 index forced the 200-day average (4,059 points). Apple closed up 0.6%; Tesla closed up 7.8%, the largest one-day gain since July; most of the popular Chinese stocks closed higher, Azera closed up more than 5%, Xiaopeng closed up 4%, ideal car and Alibaba closed up more than 3%.

European stocks generally closed higher, Germany's DAX30 index closed up 0.05%, the UK FTSE 100 index closed up 0.19%, France's CAC40 index closed up 0.32%, the European Stoxx 50 index closed up 0.44%, Spain's IBEX35 index closed up 0.05%, Italy's FTSE MIB index closed down 0.05%. The Euro Stoxx 50 closed into a technical bull market, up 20% from the September low.

Hot Spots in the Market

1. Minutes of the Federal Reserve meeting in November: Most officials support slowing interest rate hikes; The terminal interest rate will be higher than expected and uncertain; The consensus is that inflation shows no signs of slowing down; Some officials believe that slowing interest rate hikes requires that inflation pressure subsides and the policy is in a clear restrictive range; Internal economists believe that the probability of economic recession in the United States next year is 50%.

2. After the release of the minutes of the Federal Reserve's meeting, the US bond yield fell, US equities and other risky assets rose, and the panic index fell to a new low since mid August; The 50BP interest rate hike bet in December increased slightly, and the market expects the interest rate level to peak in June next year to drop by 6BP to 5.02% compared with yesterday.

3. The EU considered capping the price of Russian oil at $65-70. Some countries thought that $65 was too generous, so the negotiations reached an impasse.

4. The British Supreme Court: Scotland cannot hold an independent referendum without the approval of the British government.

5. Atlanta Federal Reserve's GDPNow model: it is estimated that the growth rate of the US economy in Q4 will be 4.3%.

6. ECB Governing Committee Santino: The 75 basis point interest rate increase is unlikely to become normal, and it is expected that the rate increase will be lower in December.

Geopolitical Situation

Conflict Situation:

1. Russia launched a series of missile attacks in various parts of Ukraine. Many explosions occurred in Kiev, Ukraine, and an infrastructure was hit; A house in the outskirts of Kiev was hit, killing one person.

2. Ukraine said that Russia launched 67 cruise missiles on Wednesday, and the Ukrainian defense forces shot down 51 of them; Of the 30 missiles launched into Kiev, 20 were shot down. 

3. Ukrainian National Nuclear Power Company: After the Russian missile attack on Ukraine, the units of three nuclear power plants have been closed, and the radiation level of all nuclear facilities remains normal.

4. General Staff of the Ukrainian Armed Forces: As of the morning of November 23, the Russian army had lost another 410 soldiers, most of whom were on three fronts.

5. Ukraine and Russian troops fought around Kinborn on the left bank of Dnieper River in southern Ukraine, while the Crimean Peninsula was attacked by drones.

6. British military intelligence agency: Since November 17, there have been no public reports of OWA drone attacks, and Russia may have almost exhausted its current inventory.

Energy Situation:

1. The EU's negotiations on the Russian oil price ceiling reached an impasse, and the proposal of US $65 was opposed by some countries.

2. The Ukraine section of the “Friendship” oil pipeline resumed oil transportation. Previously, the pipeline had been interrupted for several hours due to the Russian attack on key infrastructure.

3. Russian oil transport company: The oil pipeline to Hungary will be suspended for a week, while continuing to transport oil to the Czech Republic and Slovakia.

4. President Zelenski of Ukraine said that more than 4000 stations have been deployed in various parts of Ukraine to provide basic services for people in case of long-term power failure.

5. Ministry of Energy of Ukraine: The missile attack has temporarily shut down most of the thermal and hydroelectric power stations in Ukraine, and damaged the transmission facilities. Divisional power outage was implemented across Ukraine on the 23rd.

6. The French government said that the EU gas price ceiling proposal was not sufficiently considered.

Institutional Perspective

1. Goldman Sachs：It is expected that the yield of 10-year US treasury bonds will reach 4% or higher, and investors will turn to passive bond base

2. SOCIETE GENERALE：The S&P 500 index is expected to reach 3800 points by the end of 2023

3. MUFG：New Zealand Federal Reserve's interest rate decision may support New York in the short term

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