MHMarkets：September 13, 2023 - Fundamental Reminder

☆ At 16:00, IEA will publish monthly crude market report after Opec stuck to its forecast for strong global oil demand growth in 2023 and 2024; The EIA believes world oil supply and demand will hit record highs in 2023.

☆At 20:30, the US will release August CPI data, which is expected to accelerate to 3.6% yoy from 3.2% in July. Month-on-month growth accelerated to 0.6% from 0.2%. The core CPI is forecast to slow to 4.30%.

☆At 22:30, the U.S. will release the EIA crude oil stocks change. Market forecasts are for crude oil stocks to change by about 1.9 million barrels in the week ended September 8th, which would be the fifth straight week of lower stocks change and the longest streak of drawdowns since January 2022.

Market Overview

Review of Global Market Trend

The dollar index rose and fell on Tuesday, flirting with the 105 mark in pre-market trading before giving up most of the day's gains to end up 0.02% at 104.54. In U.S. Treasury yields, the two-year yield rose sharply and stood at 5% to close at 5.020%, while the 10-year yield fell back to 4.280%.

Spot gold fell below the 1,920 mark and fell to a more than two-week low of 1,907.63 in premarket U.S. trading before recovering some losses to end down 0.45% at $1,913.80 an ounce. Spot silver last settled down 0.05% at $23.06 an ounce.

Crude oil both rose more than 1%, with WTI crude rising more than 2% to an intraday high of $89.33 before closing up 1.73% at $88.74 a barrel. Brent crude rose above $92, its highest since November, before closing up 1.49% at $91.92.

The Dow Jones Industrial Average closed down 0.05%, the Nasdaq fell 1.04% and the S&P 500 fell 0.57%. Apple closed down more than 1.7% after the launch, Oracle fell more than 13%, Microsoft fell 1.83%, and Wework closed up about 88%.

European shares were mixed, with Germany's DAX30 closing down 0.54%, Britain's FTSE 100 up 0.41% and Europe's Stoxx 50 down 0.28%.

Market Focus

1. Opec monthly report: The oil supply gap is expected to reach 3 million barrels a day due to the extension of Saudi production cuts; The economy is resilient, keeping global crude oil demand growth unchanged this year and next. EIA Short-term Energy Outlook Report: Global oil inventories are expected to fall by 200,000 b/d in Q4 2023 after Saudi Arabia Extends production Cuts.

2. Sources: The ECB's new forecast for inflation in 2024 will be above 3%, compared with 3% forecast in June, making a solid case for a rate hike.

3. Apple released the iPhone 15 series of products, using USB-C interface, the starting price of the bank of China is 5,999 yuan, the evening of September 15th will be accepted for pre-order.

4. White House: Nvidia and eight other companies have made voluntary commitments to manage AI risks, including conducting security tests and adding digital watermarks.

5. North Korean leader Kim Jong UN arrived in Primorye, Russia, on Tuesday for talks with Russian officials.   

Geopolitical Situation

Conflict Situation

1. Head of Russian Nuclear Power Company: There was a drone attack in Nkhodar near Zaporizhzhia nuclear power plant on Monday. Two drones were shot down.

2. Russian forces engaged in fighting with Ukrainian forces in Kupiansk, Divesman, Donetsk, Zaporizhzhai and Kherson, with Russian air defense forces intercepting several Ukrainian rockets and destroying 41 Ukrainian drones.

3. The armed forces of Ukraine continue their offensive operations in the direction of Melitopol. The Ukrainian air force, rocket launchers and artillery units struck Russian personnel and equipment concentration areas, control points, ammunition depots and other targets, destroying a number of Russian artillery.  

Institutional Perspective

01

Goldman Sachs

Goldman Sachs CEO: Chances of a soft landing have increased 'very significantly' . The economic outlook remains uncertain. The Fed still has work to do on inflation.

02

SOCIETE GENERALE

SOCIETE GENERALE：The U.S. economy is expected to fall into recession in mid-2024

Subadra Rajappa, head of US rates strategy at Societe General, said a recession was “still very likely” and expected to come in the middle of next year rather than early. Economic data due this week will guide market expectations for what the Fed will do next week and whether it will raise rates in November. “We see higher spending in the summer. Consumers have shown remarkable resilience, but as the moratorium on student loans ends, savings rates start to come down and defaults start to rise, I think consumers will start to face more pressure in the fourth quarter of this year. That could curb the rise in U.S. yields.” Mr. Rajappa said Treasury bills were attractive at the moment. “I think the market has fully priced in that the Fed will keep rates higher for longer. ”If the economy does start to slow and the Fed starts to shift to an easier or less accommodative policy, then the front end of the curve will start to pick up.

03

MUFG

【MUFG：Gold demand from emerging markets could push prices higher】

September 8 - Gold prices did show signs of stabilizing earlier this week after suffering their biggest drop in more than a month. Russia and Saudi Arabia extended their agreement on production cuts into December, sending oil prices soaring, helping to push Treasury yields higher and in turn the index higher. Looking ahead, in addition to rising recession fears in emerging markets, gold demand from emerging market central banks has continued to show strength this year, driven by rising geopolitical tensions and reserve diversification interests. That suggests gold is poised to move higher, though it could be a slow climb rather than a sustained surge. A recent survey of fund managers suggests they are optimistic about gold prices in 2024.