MHMarkets ：MHM Today News

☆ At 14:00 GMT, UK monthly rate of March CPI and monthly rate of March Retail Price Index are released. Data released on Tuesday showed that recent wage growth in the U.K. unexpectedly accelerated, adding to the inflationary pressure that worries the Bank of England.  

☆At 17:00, The final annual and monthly rates of March CPI in Eurozone are released. European Central Bank President Christine Lagarde said on Monday that the current Eurozone inflation rate is still too high and there is no evidence that inflation is on the downside. Traders generally expect the ECB to raise interest rates further.

☆ At 22:30, EIA crude oil inventories and EIA strategic petroleum reserve stocks for the week ending April 14 are released. On Wednesday, US API crude oil inventories recorded a big drop of 2.675 million barrels for the week to April 14. If the EIA inventory also shows a large drop, it may bring new growth momentum for oil prices.

☆ The following day at 2:00, the Federal Reserve released its Brown Book on economic conditions. The Brown Book, released in early March, showed that overall U.S. economic activity grew slightly, the labor market remained tight, and inflationary pressures remained widespread. However, a number of indicators in the U.S. economy have changed since the release of the second Brown book.

☆ The following day at 5:30, Chicago Fed President Goolsbee delivered a speech. As the current rate hike cycle draws to a close, divisions among Fed officials have come to the fore. Goolsbee previously called for patience in considering further rate hikes, and his stance is seen as dovish.

Market Overview

Review of Global Market Trend

On Tuesday, spot gold as a whole oscillated to the upside, once falling heavily near the 1990 mark under Bullard's hawkish shouting; But then it pulled up strongly and surged nearly $20 from the intra-day low to regain the 2,000 mark, eventually closing up 0.56% at $2005.33 per ounce. Spot silver moved similarly, touching an intraday high of 25.313, before falling in late trading and eventually closing up 0.73% at $25.2 per ounce.   

The U.S. dollar index ended a two-day streak, erasing almost all of Monday's gains to end down 0.362% at 101.74; the U.S. 10-year Treasury yield resumed its downward trend to close at 3.578%.

International crude oil oscillated sideways, with amplitude expanding in the U.S. WTI crude oil once broke below the $80 mark, then quickly recovered lost ground and finally closed up 0.1% at $80.97/barrel; Brent crude oil was close to a flat close at $85 per barrel.

U.S. stocks Dow and Nasdaq closed close to flat, S&P 500 closed up 0.08%. WSB concept stocks, most popular Chinese stocks closed lower, Azera closed down about 3%, Ideal Auto, NetEase closed down about 2%.

European stocks collectively closed higher, Germany's DAX30 index closed up 0.59%, the UK FTSE 100 index closed up 0.38%, France's CAC40 index closed up 0.47%, the European Stoxx 50 index closed down 0.6%.

Market Focus

1. Speech by Federal Reserve officials - Bullard: Supports raising interest rates to 5.75% and maintaining them for a longer period of time. The market exaggerates recession concerns and should not give the expectation that we will not take further action; Bostek: We support raising interest rates again and then maintaining them for a period of time.

2. EU negotiators have reached an agreement on a $47 billion European chip bill to boost the semiconductor industry.

3. FDIC: The reserve requirement ratio of deposit insurance funds may rebound to the required 1.35% as early as next year; Previously, the fund was partly used to fund bank deposits.

4. The Sudanese Armed Forces and Rapid Support Forces agree to a temporary ceasefire for 24 hours; The US diplomatic mission was shot in Sudan, and the White House has stated that there are no plans for citizens to evacuate.

5. A fund under Brookfield, a real estate giant in the United States, has reported its second CMBS default this year, mainly involving properties located in Washington with a scale of $160 million.

6. The three hawkish led local Federal Reserve banks sought to raise the discount rate by 50BP in March, ultimately to+25BP.

7.India is considering revising its income tax law, focusing on capital gain.

8. All Southwest Airlines flights were temporarily grounded, due to a failure of the supplier's firewall.

9. European Parliament: Supports the EU in reducing carbon market emissions by 62% from 2005 levels by 2030; And pass the EU carbon border tax.

Geopolitical Situation

Conflict situation:

1. According to the General Staff of the Ukrainian Armed Forces, on Tuesday, the Ukrainian Defense Forces repelled 30 Russian attacks from four directions. Russia conducted 4 missiles and 44 air strikes against the Ukrainian army, and used MLR systems to launch nearly 20 attacks on positions of the Ukrainian army and densely populated areas, with reported civilian casualties.

2. Western officials say that Russia is “regressing” in its use of equipment in Ukraine and has not seen a significant increase in the equipment deployed by the Russian military in Ukraine.

3. Russian Ministry of Defense: Two Russian strategic bomber fly regularly over the Sea of Okhotsk and Bering Sea.

Assistance situation:

According to Ukrainian media reports, the General Staff of the Ukrainian Armed Forces announced on the 18th local time that Ukraine has received 8 “Leopard 2” tanks delivered by Canada, which were transported by the Canadian Air Force to Ukraine.

2. The German government has delivered a Patriot air defense system to Ukraine, as well as 16 Zetros heavy trucks (totaling 76 vehicles) and 2 border defense vehicles (totaling 124 vehicles).

Energy situation:

1. Minister of Energy of Ukraine: As of now, Ukraine has 9 billion cubic meters of natural gas storage.

2. Gazprom: Europe may struggle to fill its natural gas reserves to last year's levels.

Food situation:

1. Poland and Hungary prohibit the import of Ukrainian grains, but allow their transit transportation.

2. The EU will hold talks with five countries including Poland on the ban on Ukrainian agricultural products.

3. The Russian Ambassador to the United Nations stated that there has been no progress on the Black Sea Food Agreement issue.

4. Permanent Representative of Russia to the United Nations: Russian Foreign Minister Lavrov and UN Secretary General Guterres will discuss the issue of “food trading” next week.

5. The Russian Ministry of Foreign Affairs stated that inspections of ships transporting food from Ukraine have resumed. Senior Ukrainian officials deny that vessel inspections based on the Black Sea Food Agreement have resumed.

6. Sovecon, a Russian agricultural consulting company, has adjusted the forecast for Russian wheat production in 2023 to 86.8 million tons, with an estimated export volume of 43 million tons of Russian wheat in 2023/24.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: Raises ECB terminal interest rate expectations to 3.75%.

On April 18th, Goldman Sachs economists raised their forecast for the European Central Bank's terminal interest rate, reflecting the easing of financial market tensions and sustained strong potential inflation. Analysts led by Jari Stehn have stated that it is expected that the European Central Bank will raise interest rates by 25 basis points in May, June, and July, and the probability of raising rates by 25 basis points or 50 basis points at next month's meeting is “very close”. They said, “Due to stronger data, including signs that bank lending conditions are unlikely to deteriorate further, and stronger inflation data in April, a 50 basis point interest rate hike is highly likely.” They said, “From now on, the European Central Bank will tighten policies at a more gradual pace. The reasons include that the recent pressure on the banking industry may have some impact on bank lending.” “We expect core inflation to cool down in the coming months, and the uncertainty of the global outlook has increased.”

02

SOCIETE GENERALE

Societe Generale: The US dollar may have peaked against the Canadian dollar, similar to the US interest rate.

On April 12th, Societe Generale stated that no one expected the policy interest rates of the Bank of Canada to change tonight. However, futures traders have established their largest Canadian dollar short position since January 2019. The USD/CAD tracks the relative interest rates between the US and Canada, but so far, the biggest driving force behind this price difference is the trend in US interest rates. We believe that the US dollar has peaked against the Canadian dollar and will decline to 1.25 in the coming months, even though the sticky core CPI data and lackluster policy statements from the Canadian central bank may not have a significant driving effect on the currency pair.

03

MUFG

We believe that recent developments will support the Canadian dollar, so we have added new short positions against the US dollar, with a target level of 1.2950 and a stop loss level of 1.3650.