Mohicans markets：MHM Today News

☆ 18:30 ECB President Lagarde will speak. This week, the market rumors that the ECB will slow down the pace of interest rate hikes to 25 basis points, investors can pay attention to whether Lagarde will mention the relevant information.

☆ 20:30 The ECB releases the minutes of its monetary policy meeting. Futures markets are betting on European interest rates to top out at 3.2% in August this year, compared to expectations of 3.5% a month ago.

☆ 21:30 The U.S. releases initial jobless claims for the week to January 14, and the Philadelphia Fed manufacturing index for January. The data will continue to influence the market's expectations for the Fed's rate hike path and the state of the U.S. economy.

☆ 24:00 EIA crude oil inventories and strategic oil reserve inventories for the week ending January 13 will be released.

☆ The following day at 02:15 Fed Vice Chairman Brainard speaks on the economic outlook.

Market Overview

Review of Global Market Trend

On Wednesday, January 18, the dollar index intraday decline once expanded to 0.8%, down to 101.52, then rebounded back to 102 above, and finally closed slightly up 0.03% at 102.41. The EURUSD rose above 1.08; the GBPUSD rose above 1.24, which hit a new one-month high again; the Jpy/USD plunged 2.7%. After the dollar index rebounded, non-dollar currencies retreated sharply.

The yield on the 10-year U.S. Treasury note fell below 3.40%, touching its lowest since last September, as U.S. data may signal that the Fed's policy will not be too hawkish. The yield on the 2-year U.S. Treasury note fell to 4.085%, which was the lowest since Oct. 5 last year.

Spot gold once rose nearly 1% and broke above $1,925, hitting another nearly nine-month high since late April last year; but then forced down $1,900 and finally closed down 0.22% at $1,904.51 per ounce, having fallen three days in a row. Spot silver rose to $24.33 before falling sharply below the $24 mark, closing down 1.94% at $23.47 per ounce.

Crude oil surged higher before plunging, with WTI crude falling below the $80 mark and narrowly missing the $79 barrier, closing down 2.36% at $79.10 per barrel; Brent crude fell back below $85, closing down 2.46% at $84.51 per barrel. Ed Moya, senior market analyst at OANDA, said the rally in oil prices is unlikely to last after energy traders saw widespread weakness in most areas of the U.S. economy. European benchmark TTF Dutch natural gas ended the day up more than 5%, standing above 60 euros per megawatt-hour, rebounding for a second straight day from a nearly one-and-a-half-year low. NYMEX February U.S. natural gas futures closed down 7.67% at $3.3110 per million British thermal units.

U.S. stocks opened higher as U.S. data lifted expectations of a dovish turn by the Federal Reserve, but turned lower after Fed officials delivered hawkish speeches. The three major stock indexes collectively closed lower, with the Dow closing down 1.81%, the Nasdaq down 1.24% and the S&P 500 closing down 1.55%. Faraday Future closed up about 25%; popular Chinese stocks closed broadly lower, with YMM falling 10%.

European stocks were mixed, Germany's DAX30 index closed down 0.03%, the FTSE 100 index closed down 0.28%, France's CAC40 index closed up 0.09%, the European Stoxx 50 index closed down 0.02%, Spain's IBEX35 index closed up 0.46%, Italy's FTSE MIB index closed up 0.29%.

Market Hotspots

1. The Bank of Japan will increase its bond purchases in a flexible manner. President Yoshihiko Kuroda believes that there is no need to further expand the yield range, and the yield curve control (YCC) is completely sustainable.

2. Fed official's speech - Bullard: Even if inflation falls this year, the Fed will tend to keep interest rates high; Huck: It is expected that the Federal Reserve will raise interest rates several times this year, and the inflation rate will fall to the Federal Reserve's target of 2% in 2025; Mestre: The interest rate range should be “higher” than the current forecast of 5% - 5.25% at the end of 2023; Logan: We support slowing down the pace of interest rate increase.

3. Data - The monthly rate of retail sales in the United States recorded - 1.1% in December, the largest decline since December 2021. The monthly rate of CPI in the euro area recorded - 0.4% in December, the largest decline since August 2020.

4. Federal Reserve Chairman Powell tested positive on COVID-19 on Wednesday, with mild symptoms. At present, he is isolated at home and telecommuting.

5. The Federal Reserve's Beige Book shows that the high inflation rate in the United States continues to reduce the purchasing power of consumers, especially low-income households.

6. IEA monthly report: The oil market will face greater surplus. The global oil demand is expected to increase by 1.9 million barrels per day in 2023, reaching a record 101.7 million barrels per day.

7. Apple will expand its smart home product line and challenge Amazon and Google.

Geopolitical Situation

Conflict situation:

1. The Ukrainian official helicopter crashed in Kiev, killing 18 people, including at least three children. The Ukrainian Interior Minister, Deputy Minister and State Secretary were killed in the accident. The Cabinet of Ukraine appointed the Director of the National Police to act as the Minister of Interior.

Assistance:

1. The White House of the United States indicated that it might provide Ukraine with new assistance programs this weekend, including new weapons. The news said that the United States was considering providing Stryker armored vehicles for the next batch of aid plans to Ukraine.

2. German Prime Minister Schultz hinted that there was no commitment to provide Ukraine with modern main battle tanks. German officials said that Germany would not agree to export German tanks to Ukraine unless the United States sent its own tanks.

3. Michel, President of the European Council: I personally support the supply of tanks to Ukraine.

4. Minister of Defense of Canada: Canada provided 200 armoured personnel carriers for Ukraine.

5. President Metsola of the European Parliament: Ukraine needs Panther 2 tanks to defend itself.

6. The United States Agency for International Development (USAID) announced that it would provide 125 million dollars of additional assistance to Ukraine in the field of energy.

Institutional Perspective

01

Goldman Sachs

It is expected that Russia's production will decline by 600000 barrels per day in April due to the lack of oil tankers to fully transfer oil after the upcoming embargo. Although the EU imposed an embargo on Russia and the Group of Seven also imposed a price ceiling on crude oil, the total output of liquefied products in Russia is expected to remain unchanged. At present, if the elasticity of Russian oil production continues, it means that the moderate downward risk of Brent crude oil price in 2023 is $9/barrel, which is expected to reach the average price of $97.5/barrel. Any retaliation by Russia through voluntary production reduction means that there is a risk of oil price rise.

02

SOCIETE GENERALE

It is expected that the interest rate and YCC target will remain unchanged, and the possibility of strengthening the treasury bond purchase operation and expanding the YCC target range to ± 75 basis points is 25%.

03

MUFG

The market was shunned by the Bank of Japan. Investors may start to buy bonds (after the market opens), but the purchase will be limited, because with the yield curve still distorted, the Bank of Japan may take action again in the future.