Mohicans markets：MHM Today News

February 22, 2023 - Fundamental Reminder

☆ At 3:00 a.m. the next day, the Federal Reserve will release the minutes of the February monetary policy meeting. Investors need to pay attention to the views of the committee members on the pace of the Fed's subsequent interest rate increase.

Market Overview

Review of Global Market Trend

On Tuesday, strong economic data triggered traders' expectations of the Fed's hawkish interest rate increase. Spot gold took back most of the day's gains and failed to stand above $1840, and finally closed down 0.37% at $1835.34 per ounce. Spot silver closed up 0.12% at $21.85 per ounce.

The US dollar index fluctuated around the 104 level and ended up 0.31% at 104.19. Due to the latest data, traders are cautious about the Federal Reserve. The yields of two-year and 10-year US Treasuries have reached the highest level since November last year, and the yield of 10-year US Treasuries has risen to 3.962%.

In terms of crude oil, the trend of two oil days was tangled. WTI crude oil rose to a session high of $77.60 before the US market, then took back all gains and turned down, and finally closed down 1.45% at $76.16 per barrel; Brent crude oil closed down 1.35% at $82.53 per barrel. In terms of natural gas, US natural gas futures fell more than 9.00% in the day.

US stocks fell sharply as the rising yield continued to put pressure on market sentiment, and the latest batch of retail enterprises announced revenue, which increased market concerns about consumer conditions. The three major stock indexes all recorded the largest one-day decline in the year, with the Dow Index down 2.06%, the Nasdaq Index down 2.5% and the S&P 500 Index down 2%.

European stocks fell across the board, with Germany's DAX30 index closing down 0.52% at 15397.62; The FTSE 100 index closed down 0.46% at 7977.75; The European Stoxx 50 Index closed down 0.49% at 4250.4.    

Energy situation:

1. Rosneft has received applications from Poland and Germany to transport oil through the “Friendship” pipeline in the second quarter.

2. Deputy Prime Minister Novak of Russia: Russia's current oil production is close to the level in January. Russia is considering banning the sale of fuel under the price ceiling.

3. Rosneft: It is planned to transfer at least 40 million tons of oil through the port of Kozmino in 2023.

Institutional perspective

01

Goldman Sachs

Goldman Sachs: It is expected that the European Central Bank will raise interest rates by 25 basis points in June 2023, raising the expected terminal interest rate from 3.25% to 3.5%.

02

SOCIETE GENERALE 

[SOCIETE GENERALE: The European Central Bank may raise interest rates further to boost the euro]

Societe Generale said that the European Central Bank may further raise interest rates significantly to curb inflation, thus boosting the euro. Olivier Korber, foreign exchange strategist at Societe Generale, said in a report that the risk of recession in Europe and the tight labor market should maintain the upward risk of core inflation. Economists at the bank still expect the European Central Bank to further tighten its policy significantly. The European Central Bank will suspend interest rate increases only when the economy is on a more sustainable path of inflation. Korber said that due to the cautious attitude of the market, the peak interest rate expectation may be repriced higher.

03

MUFG

[MUFJ: If UK inflation is further cooled, the decline of sterling may increase]

MUFJ said that the pound would face further decline if the data to be released showed that British inflation would cool down further before the next policy meeting of the Bank of England. Derek Halpenny, an analyst at MUFJ, said Wednesday's data showed that inflation in the UK slowed more than expected in January, indicating that the Bank of England may suspend the interest rate increase cycle in March. Halpenny pointed out that after the release of the UK employment data on Tuesday, the market fully digested the expectation of a 25 basis point interest rate increase in March, but now it has dropped to 80%. If the inflation data in February slows down further, the interest rate is expected to have “ample space” to fall further, which will put pressure on the pound.