MHMarkets：January 23, 2024,--Fundamental Reminder

11:00 JPY BOJ Interest Rate Decision & Outlook Report

14:30 JPY BOJ Governor Kazuo Ueda Press Conference

Next Day 05:30 USD API Crude Oil Stock Change (JAN/19)

Market Overview

Review of Global Market Trend

On Monday, the U.S. dollar index was range-bound above the 103 mark, and finally closed up 0.09% at 103.32; 10-year U.S. bond yields fell back, and at one point during the session fell below the 4.1% mark, and ultimately closed at 4.107%; two-year U.S. bond yields, which are more sensitive to the Fed's policy rate, closed at 4.393%.

Spot gold tumbled as it probed the $2,030 mark several times during the session, but failed to break through here, and eventually narrowly defended the 2,020 mark, closing down 0.38% at $2,021.81 per ounce. Spot silver in the pre-European and U.S. session before the session dived sharply, the plate once fell below the 22 mark, and finally closed down 2.29% at $22.09 per ounce.

Perhaps because of the Russian and U.S. oil supply disturbances, international crude oil rose more than 1%. WTI crude oil rose sharply in the U.S. trading session, and once returned to the upper $75, but then retracted some of the gains, and finally closed up 1.61% at $74.57 per barrel; Brent crude oil once returned to the $80 mark, but failed to stand firm above this mark, and finally closed up 1.54% at $79.86 per barrel.

The three major U.S. stock indexes closed collectively, with Dow up 0.36%, S&P 500 index up 0.22%, both set a new closing high, and Nasdaq up 0.32%. NVDA.O shares once exceeded $600, renewed record highs, and eventually closed up 0.27%; AAPL.O closed up 1%, the market value back to $3 trillion; AMD.O fell 3.4%, Meta META.O intraday market value of $1 trillion. The Nasdaq China Golden Dragon closed down 2.2%, with HUYA.N down 12% and BABA.N down 1%.

The major European stock indexes closed higher across the board, with the Euro Stoxx 50 closing up 0.71%, Germany's DAX 30 closing up 0.77%, and Britain's FTSE 100 closing up 0.35%.

Market Focus

1. The Council of the European Union has approved the Red Sea escort plan proposed by Italy, France and Germany.

3. Maersk said the ME2 (Europe-Middle East) route was temporarily diverted to the Cape of Good Hope.

5. Iran's Semnan Province official: the sound of a huge explosion on the ground may be related to warplanes breaking the sound barrier.

6. U.S. pushes treasury trading toward central clearing.

7. According to Nikkei, the Bank of Japan will revise its CPI forecast until FY2025, and will maintain for the time being its outlook estimate that CPI will rise by about 2%.

Institutional Perspective

01

Standard Chartered Bank

【Standard Chartered Bank: Moderate interest rate cuts by the Fed may also lead to a decline in the U.S. dollar, and the strengthening of the U.S. dollar may not happen again】

Steve Englander, Head of G10 Foreign Exchange Research at Standard Chartered Bank, stated that a significant interest rate cut by the Fed will have a negative impact on the U.S. dollar, but even moderate easing policies may lead to a decline in the U.S. dollar. He stated in his statement, “If economic activity and inflation are weaker than expected, leading to the Fed taking action, the U.S. dollar is likely to fall. However, the consensus on a soft landing also means that the Fed will cut interest rates.” Standard Chartered Bank believes that the situation of a comprehensive strengthening of the U.S. dollar by the end of 2021 and 2022 is unlikely to happen again, as it is driven by the Fed's uncompromising stance in dealing with inflation.

02

Fitch

【Fitch: It is expected that central banks of 19 economies will cut interest rates within the year, and the Fed may take action as early as the second half of the year】

Fitch has released a report stating that central banks around the world will generally lower policy interest rates in 2024, but the magnitude will not be too significant. Fitch stated in its latest economic observation that interest rates at the end of this year will still be much higher than pre-pandemic levels. After the recent decline in inflation rates and dovish comments from the Fed, Fitch predicts that the Fed, European Central Bank, or Bank of England will not further raise interest rates during this tightening cycle. By the end of 2024, each central bank will cut interest rates by 75 basis points. Fitch predicts in its global economic outlook that there will be a large-scale interest rate cut globally, with central banks in 19 out of 20 economies lowering rates this year, and only the Bank of Japan expected to raise rates.

03

CICC

【CICC: Strong consumption adds uncertainty to the Fed's interest rate cuts】

According to a research report by CICC, the latest data shows that the U.S. retail sales increased by 0.6% month on month in December 2023, marking the strongest growth rate in three months. Looking ahead, strong consumption will increase the resilience of the U.S. economy, reduce the likelihood of recession, and as the risk of recession decreases, the urgency for the Fed to cut interest rates will also decrease. CICC believes that the Fed may not cut interest rates in March as expected by the market, and the expectation of six rate cuts throughout the year may also be too aggressive.