Mohicans markets：MHM Today News

February 16, 2023 - Fundamental Reminder

☆ At 21:30, the United States will release January's PPI data. At present, the market expects that it will increase by 5.40% year-on-year. It is worth noting that the January CPI data of the United States is slightly higher than expected. It is necessary to be alert about the possibility of this PPI data exceeding expectations.

☆ At 2:30 the next day, St. Louis Fed Chairman Brad will deliver a speech. Previously, he said that even if inflation falls this year, the Fed will tend to keep interest rates high.

Market Overview

Review of Global Market Trend

On Wednesday, spot gold fell sharply after rising to the high of $1860.08, falling nearly $30 at one time, and finally closing down 0.99% at  $1835.96 per ounce; Spot silver fell 1.05% to $21.62 per ounce.

The US dollar index rose sharply, breaking through the 104 mark for the first time since January 6, and then fell back to 0.56% at 103.84; The yield of 10-year US Treasuries rose to 3.8%. The yield of US 2-5-year treasury bonds hit a new high in 2023, and the upside down range of US two-year and 10-year treasury bond yields further expanded to 89.8 basis points.

In terms of crude oil, the two oil fluctuated greatly in the intraday, showing a “N” trend. WTI crude oil recovered most of its losses in the US market and ended down 0.41% at $78.47 per barrel; Brent crude oil closed down 0.11% at $85.16 per barrel.

The US stock index rose 0.11%, the Nasdaq rose 0.92%, and the S&P 500 index rose 0.28%. WSB concept stocks and solar energy stocks were the top gainers, while vaccine stocks and oil stocks were mostly lower. TSMC closed down about 5%.

European stocks closed higher, with Germany's DAX30 index up 0.82% to 15506.34; The FTSE 100 index rose 0.55% to 7997.83; The European Stoxx 50 Index rose 0.97% to 4280.04.

Market Focus

1. The White House considers letting Chicago Fed President Goolsby take over as Fed Vice Chairman, when Cleveland Fed President Mester will act as the Chicago Fed's FOMC vote until the latter's leadership vacancy is filled.

2. The European Union announced the tenth round of sanctions against Russia.

3. World Bank President Malpass will resign by the end of June.

4. French President Macron met with Wang Yi, who expressed his willingness to fully restart exchanges with the French side in various fields.

5. Russia will raise oil export tax to $14.2 per ton from March 1.

6. SBF's two other bond guarantors announced, both linked to Stanford University, and bitcoin surged to a new high last August.

7. IEA monthly report: Global oil demand is expected to grow by 2 million barrels per day to 101.9 million barrels per day in 2023.

8. U.S. January retail sales recorded a higher-than-expected monthly rate of 3%, which was the largest increase since March 2021.

9. U.S. Congressional Budget Office: If the debt ceiling is not raised, the Treasury will default on its debt in July to September; the U.S. economy is expected to grow at a rate of 0.3% this year.

Geopolitical Situation

Conflict Situation：

1. European Commission Vice President and “Foreign Minister” Borrelli: The Russian-Ukrainian conflict will be decided this spring and summer.

2. Russian official in Kharkiv region: Russia plans to retake all settlements in the Kharkiv region, which surrendered to Ukraine last year.

3. Ukrainian side says they have repelled some attacks in the Luhansk region, but the situation in the region remains difficult.

4. Governor of Ukraine's Luhansk region: Russia is sending equipment and mobilizing troops to the Luhansk region.

5. Ukrainian Deputy Defense Minister: Russia is launching a full-scale blockade attack in the east and the situation is tense.

Energy Situation：

1. Japan Petroleum Association President: Japan may import Russian oil from the Kuril 2 project if needed to ensure stable LNG supplies.

2. IEA monthly report: OPEC+ oil supply will shrink due to Russian sanctions.

3. According to TASS: Russian State Duma (lower house) passed the bill on Urals crude oil prices in the first reading.

Assistance Situation：

1. European Commission Vice President and Foreign Minister Borrelli: the total amount of EU aid to Ukraine is 60 billion euros.

2. NATO Secretary General Jens Stoltenberg: The new commitments of NATO countries to Ukraine include the provision of heavy weapons and military training.

3. British Ministry of Defense: Ukraine will receive millions of pounds from international funds to upgrade its capabilities. The UK, the Netherlands, Sweden, Denmark, and Iceland and Lithuania are jointly contributing more than £520 million to the fund. The first equipment provided to Ukraine will include artillery ammunition, maritime intelligence, surveillance and reconnaissance, and equipment spares.

4. The U.S. State Department: the United States will provide another $9.9 billion in budget support to Ukraine, and is currently assessing how best to use seized Russian assets to help Ukraine.

5. According to Ukrainian media, Swedish Prime Minister Stefan Kristersson said that Sweden will provide 51 infantry fighting vehicles, one set of Archer self-propelled howitzers and several air defense weapons to the Ukrainian side, and does not exclude the possibility that Sweden will provide Ukraine with Eagle-Lion fighter jets.

6. Italian Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation Antonio Tajani said that Italy has approved the sixth round of military assistance to Kiev, and no new assistance is in the pipeline.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs (GS.N) has dropped plans to develop a Goldman Sachs-branded credit card for individual users after deciding to shift its focus away from retail banking. A Goldman Sachs spokesman said the company discussed the idea of a consumer-oriented proprietary credit card, but it did not become an important part of the bank's strategy.

02

SOCIETE GENERALE：The EURUSD is bullish in the long term.

The EURUSD rally came to an abrupt halt after the market interpreted the ECB's February interest rate decision as dovish. Societe Generale economists pointed out that in the long run, the EURUSD is still pointing upwards. Further profit-taking cannot be ruled out on the technical front. The ECB may try to correct the market's dovish interpretation of the February interest rate decision and statement, which may attract euro buying, but (euro) confidence is likely to remain low ahead of next week's US CPI release. The longer-term trend for the euro remains tilted to the upside against the dollar due to its own improving terms of trade, a boost in Chinese growth, a narrowing Fed/ECB policy spread and attractive valuations. The main downside risks lie in a new Russian offensive against Ukraine, a further deterioration in relations between Russia and the West and disruptions in European energy supplies.

03

MUFG：The dollar has recovered most of its losses since the beginning of the year.

The dollar continued to strengthen, reaching its highest level in nearly four weeks against a basket of currencies after the release of much stronger-than-expected U.S. jobs data on Friday, as the U.S. economy looks more resilient and more rate hikes are likely, Mitsubishi UFJ Financial Group said in a report. Market participants have begun to price in the increased likelihood that the Fed will raise rates at least two more times by 25 basis points before pausing the rate hike cycle. The U.S. interest rate market has lowered expectations for rate cuts to begin later this year, so the dollar has recovered most of its losses since the beginning of the year.