MHMarkets：August 31, 2023 - Fundamental Reminder

☆ 09:30 CNY NBS Manufacturing PMI (AUG)

☆ 17:00 EUR Inflation Rate YoY Flash (AUG) & EUR Inflation Rate MoM (AUG) & EUR Unemployment Rate (JUL)

☆ 19:30 USD Challenger Job Cuts (AUG)

☆ 19:30 The ECB publishes the minutes of its July monetary policy meeting

☆ 20:30 CAD Current Account (Q2) & USD Initial Jobless Claims (AUG/26) & USD Core PCE Price Index YoY (JUL) & USD Personal Spending MoM(JUL) & USD Core PCE Price Index MoM (JUL)

☆ 21:45 USD Chicago PMI (AUG)

☆ 22:30 USD EIA Natural Gas Stocks Change (AUG/25)

Market Overview

Review of Global Market Trend

The US GDP growth rate in the second quarter and ADP data released on Wednesday both missed expectations, helping to reduce pressure on the Fed to raise interest rates further. The dollar index staged another “dive” in the US session, falling below 103 round numbers at one point and closing down 0.37% at 103.18.

Treasury yields continued to be pushed lower, with the 10-year yield briefly falling below 4.10% to close near 4.12%, a near three-week low; The yield on the two-year Treasury note, which is more sensitive to monetary policy, fell as much as 5 basis points to close near 4.89%.

Spot gold rose for three consecutive days, briefly pushing the $1,950 mark, and closing up 0.26% at $1942.42 an ounce. Spot silver briefly rose above the $25 mark for the first time in more than a month, but later gave up intraday gains to end down 0.38% at $24.61 an ounce.

Crude oil continued to cut supplies, WTI crude oil traded rose to $81.81 a barrel, closed up 0.48% at $81.67 a barrel. Brent crude rose as high as $85.62 a barrel before settling up 0.33% at $85.23.

The three major U.S. stock indexes consolidated throughout the day to close higher. The Dow Jones industrial average closed up 0.11%, the nasdaq closed up 0.54%, and the s&p 500 index closed 0.39% higher. The Nasdaq China Golden Dragon Index edged down 0.15%, with Baidu closing up 3%, NIO and Li Auto both down more than 2%. VinFast Auto ended down nearly 11% with a 43% swing, halving its market value from its peak to $95 billion.

Major European stock indexes were divided, with Germany's DAX30 closing down 0.22%, Britain's FTSE 100 up 0.14% and the Euro Stoxx 50 down 0.26%.

Market Focus

1. An insider : Apple is testing 3D printing technology to build watches.

2. Australian Trade Minister's Office: Free trade talks between Australia and the European Union will resume on Thursday (August 31).

3. Russian Deputy Prime Minister Alexander Novak: We do not rule out extending oil export cuts until October. Russia's oil exports in September will be reduced by 300,000 barrels per day compared with June. An action plan for October is being discussed with partners.

4. Us ADP data in August came in at a lower-than-expected 177,000, the smallest increase in five months, US GDP growth rate was revised down to 2.1%, and crude oil stocks change fell by 10.584 million barrels last week, the largest decline since the week of July 28; strategic petroleum reserves change rose 594,000 barrels and VinFast's market value halved from its peak to $95 billion.   

Geopolitical Situation

Conflict Situation

1. Ukrainian officials: Russia launched its biggest air strikes on Kyiv since the spring early Wednesday, killing two people.

2. Ukrainian military: Ukrainian air defenses shot down 28 Russian missiles and 15 of the 16 drones launched overnight.

General staff: 3. Ukraine Ukrainian military settlements in zaporozhye Novoprokopivka and Verbove progress, strengthened has seized position.

4. According to wu media: Russia in the Crimean planted barge south of the bridge, the barge will be blocking bridge “barrier”, used against Ukraine navy unmanned craft.

5. Ukrainian drones struck an airport in Russia's Pskov region overnight, hitting at least four large Il-76 military aircraft. This is Ukraine in 18 months of conflict to the largest Russian territory drone strikes.

Food Situation

1. Senior State Department official: The United States is exploring alternative routes for Ukrainian grain exports, chief among them via the Danube River. The United States is working with Romania, by the river course, likely to double Ukraine's food exports.

2. Russian Foreign Ministry: Russian Foreign Minister Sergei Lavrov and Turkey's foreign minister will discuss Putin's proposal to send 1 million tons of food to Turkey with financial support from Qatar during talks in Moscow. The initiative will see Turkey process Russian grain and supply it to the countries that need it most. We think this project is the best work of the black sea agreement alternatives.

Energy Situation:

Russian Deputy Prime Minister Vladimir Novak: Russia complied with its production cut commitment in August. An extension of the export cut to October has not been ruled out. Russia's oil exports in September will reduce than June 300000 barrels a day. An action plan for October is being discussed with partners.

MHMarkets

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：The August ADP data is expected to moderate】

On August 30, Goldman sachs said, given the JOLTs job openings yesterday, they now estimate ADP employment will increase in August 150,000 people in the United States (value for an increase of 324,000, before the market consensus forecasts for an increase of 198,000), reflecting a big employment indicators data continued robust but weakness. In addition they noticed that in the past seven years, six years of August ADP employment growth has slowed.

02

SOCIETE GENERALE

【SOCIETE GENERALE：The dollar remains the most popular currency】

August 24 - Although currency markets are still in the summer doldrums, the US dollar is still the top dog in the market, said Kit Juckes, chief global FX strategist at Societe Generale. In August, dollars all the way higher, and is expected to continue to rise, until the BOJ takes action (They will not meet again until September 22nd). Either European data (unlikely) gets better or US data be weak or Fed officials adopting a more cautious tone at Jackson Hole.

03

MUFG

The BOJ's record pace of bond purchases increases the need to adjust yield curve control policies

August 21 -The BOJ has bought government bonds at a record pace this year, which may be one factor prompting the bank to allow yields to fluctuate in a wider range in the near term, reducing pressure on it to keep long-term rates under control. The BOJ hasn't significantly reduced its bond purchases after widening the yield-curve band in December and last month, and the ramp-up after each change raises questions about whether the central bank is moving too slowly to adjust policy and would have to go too far to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at MUFJ Morgan Stanley Securities, said that if the BOJ reduced its bond purchases, market participants would take it as a signal that it was close to exiting its easing policy, pushing yields higher and forcing it to buy more.