MHMarkets ：MHM Today News

☆ Today, President Joe Biden will negotiate with four leaders of Congress at the White House on the debt ceiling issue.

☆ At 20:30, Fed Governor Jefferson will give a speech, after Biden considered nominating Fed Governor Jefferson as Fed Vice Chairman, according to U.S. media reports.

☆ The following day at 0:05, FOMC permanent vote member and New York Fed President Williams will deliver the keynote speech at a lunch event hosted by the Economic Club of New York, investors can pay attention to his views on last Friday's burst non-farm payrolls and the credit crunch.

☆ The following day at 4:30, the U.S. will release API crude oil inventories for the week to May 5. If API crude oil inventories decrease significantly again, it may continue to support the rally in oil prices.

Market Overview

Review of Global Market Trend

Spot gold oscillated to the upside on Monday, rising to near the $2030 mark during the day, before falling back a bit and standing firmly above $2020, eventually closing up 0.2% at $2020.98 per ounce. Spot silver trend diverged from gold, closing down 0.46% at $25.55 per ounce.

The U.S. dollar index fell before rising, once before the European session forced 101 mark, but in the U.S. session to recover most of the lost ground, finally closed up 0.09% at 101.37. U.S. bond yields rose sharply, including the two-year U.S. bond yields more sensitive to the interest rate outlook rose to 4% above, closing at 4.001%; 10-year U.S. bond yields rose to near 3.5%, closing at 3.507%.

Crude oil continued to rally as fears of a U.S. recession eased and some traders argued that a three-week losing streak in oil prices due to demand concerns was a bit overdone. WTI crude oil rallied to a high of $73.59 during the day and eventually closed up 2.06% at $72.76 per barrel; Brent crude oil rose to near $77 during the day and eventually closed up 1.71% at $76.56 per barrel.

U.S. stocks closed mixed, with the Dow closing down 0.17%, the Nasdaq closing up 0.18%, and the S&P 500 closing up 0.05%. Pharmaceutical outsourcing concept, department stores, live-streaming concept stocks were weak, with Douyu Live streaming platform closing down about 3%.

European stocks were mixed, Germany's DAX30 index closed down 0.05%; the FTSE 100 index closed up 0.98%; the European Stoxx 50 index closed up 0.19%.

Market Focus

1. U.S. Treasury Secretary Yellen said the Biden administration will not negotiate on the debt ceiling with a “gun to the head” and does not rule out the possibility of a recession.

2. Sources: for the debt ceiling impasse to identify the pros and cons, Yellen one-on-one talks with the CEOs of U.S. companies.

3. British media: Armenia and Azerbaijan will resume peace talks in Brussels.

4. Australia will achieve a budget surplus of A$4 billion in 2023 for the first time in 15 years.

5. The G7 may propose measures on dealing with future bank runs: providing quick funding for banks and expanding deposit insurance.

6. California intensifies scrutiny of banks with assets over $50 billion and examines the risks posed by social media.

7. Wildfires in Alberta, Canada's major oil and gas province, caused more than 30,000 people to evacuate and the governor asked the federal government for help, and several energy companies' production was affected.

8. U.S. wholesale sales recorded a monthly rate of -2.1% in March, which was the largest decline since April 2020; New York Fed survey: one-year inflation expectations fell to 4.4%, from 4.7%.

9. The Fed's Senior Loan Officer Opinion Survey showed a smaller-than-expected tightening of bank credit standards and a significant reduction in corporate credit demand.

10. Federal Reserve Financial Stability Report: Continued bank stress could lead to a significant economic slowdown, the banking sector as a whole remains resilient and has a strong capacity to absorb losses, with some banks under significant funding stress. There is substantial liquidity risk in some areas.

Geopolitical Situation

Conflict Situation：

1. Ukrainian officials: Ukraine issued a nationwide air defense alert.

2. Kiev Mayor Klitschko: Kiev was hit by the “largest” attack since Russia launched a special military operation against Ukraine late on the 7th and early on the 8th.

3. Russia Today: Large-scale drone and missile attacks in Ukraine, explosions in Kiev and the Odessa, Chernihiv and Dnepropetrovsk regions throughout the night.

4. Head of the Russian “Wagner Group” Prigozhin: There is heavy fighting in the Bakhmut region and we are starting to receive ammunition.

5. Ukrainian Air Force: 35 Russian drones were shot down during the night.

6. NATO official: NATO air patrol forces are on “higher alert” due to “dangerous behavior” of Russian military aircraft approaching Polish planes over the Black Sea on Friday.

7. Russian Defense Ministry: Russian forces launched offensives in the direction of Bakhmut, Kupyansk, Red Liman and Donetsk, destroying armored vehicles, arsenals and other U.S. Army equipment and facilities. Russian airborne forces conducted strikes against Ukrainian forces on both flanks in western Bakhmut. Russian air defense systems also shot down UAF drones in several locations.

8. General Staff of the Armed Forces of Ukraine: The Ukrainian Army repelled Russian offensives in the direction of Bakhmut, Red Liman and Avdeyevka. Especially in the direction of Bakhmut and Malinka, the Ukrainian troops are still engaged in fierce battles with the Russian troops. The Ukrainian Air Force carried out several strikes against the areas of concentration of Russian manpower and equipment.

Assistance Situation：

1. Japanese Prime Minister Fumio Kishida: He hopes to use the G-7 Hiroshima summit as an opportunity for member countries to pledge their firm support to Ukraine.

2. According to the Associated Press: the U.S. will provide $1.2 billion in long-term security assistance to Ukraine.

3. Polish Defense Minister: Poland has handed over 10 MiG-29s to Ukraine.

4. Ukraine's Finance Ministry said it received nearly 190 million euros from the World Bank.

Food Situation：

MHMarkets

Institutional Perspective

01

Goldman Sachs

Goldman Sachs joins Barclays camp, and does not optimistic that the Fed will cut interest rates significantly this year

On May 9 -- Following Barclays, Goldman Sachs U.S. interest rate strategists are also advising clients to prepare for the Federal Reserve not to cut rates significantly this year. Prices for swap contracts linked to the Fed's session show that the market expects policy rates to end the year about 70 basis points lower than current levels. And Goldman Sachs strategists such as Praveen Korapaty are advising investors to be December swap contract payers, betting that rates will rise. They said in a report that historically, when the Fed has conducted a series of rate hikes (last week was the 10th since March 2022) will keep rates unchanged in the next two meetings, and the most common follow-up in the next six months is for the Fed to stay put. The bank believes that the above historical observations “and the market digestion of interest rate cuts contrary to”.

02

SOCIETE GENERALE

Societe Generale: BoE expected to raise interest rates by 25bp and the pound is expected to be boosted

On May 8 -- Societe Generale economists expect a hawkish 25-bp rate hike from the Bank of England this week, which is expected to provide support for the pound and counter the bearish seasonal trend. After the release of higher-than-expected payrolls and inflation data last month, some members cannot be ruled out from calling for another 50 bps rate hike, thus facing a three-way split. We forecast the BoE to raise rates by 25 bps to 4.50% and assess against some members' call for a 4.5% terminal rate.

03

MUFG

Mitsubishi UFJ: BoE unlikely to disrupt current positive pound performance

The pound remains the best performing G10 currency in 2023 and was by far the best performer in the second quarter. Economists at Mitsubishi UFJ expect that the BoE meeting will not put pressure on the pound. The U.K. economy continues to show resilience, and improving terms of trade from energy prices is a key positive development for the pound. Bank of England chief economist Peel has already spoken of a “positive demand shock”. We do not expect the BoE to disrupt the current positive performance of the pound. The euro may break lower against the pound.

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