Mohicans markets：MHM Today News

☆ 07:50 The Bank of Japan announced the summary of the opinions of the deliberation members.

☆ At 23:00, the United States announced the monthly rate of the contracted sales index of existing houses in November and the manufacturing index of Richmond Fed in December.

☆ At 05:30 the next day, the United States announced the API crude oil inventory for the week ending December 23.

Market Overview

Review of global market trend

On Tuesday (December 27), the optimism of the easing of epidemic restrictions put pressure on the US dollar. The US dollar index fell to a daily low of 103.89 in the European market, rose above the 104 level before the US market, and finally fell 0.16% to 104.16. Non US currencies rose broadly.

The US bond yield rebounded. The two-year US bond yield broke 4.44% in the day and fell back to 4.38% at the close of the US stock market; The 10-year US bond yield topped 3.86%, rising more than 10 basis points within the day. In addition, the yield of euro zone government bonds rose on Tuesday, continuing the rising trend after the tough statement at the European Central Bank meeting earlier this month. The yield of German two-year bond, which is most sensitive to changes in interest rate expectations, once rose to 2.714%, hitting the highest level since 2008. As the benchmark of the euro zone, the yield of German 10-year bonds once rose 12 basis points to 2.507%, close to the highest level of 2.532% reached in October 2011.

Spot gold showed a strong performance. The US market started to rise at $1830 per ounce, the first time since June 29, and the highest level was $1833.13 per ounce. However, the rebound of US Treasury bond yield overshadowed the rise of non yield gold. Finally, spot gold rose 0.86% to USD 1813.91/oz; Spot silver closed 1.3% higher at $24.05/oz.

After Russian President Vladimir Putin announced that it was forbidden to supply oil to customers who complied with the western price ceiling, WTI crude oil increased to 2% within the day, breaking the $81 threshold, and Brent crude oil broke the $85 threshold at the highest, but then the two crude oils fell back. Finally, WTI crude oil closed 0.54% higher at 79.82 USD/barrel; Brent crude oil closed 0.59% higher at USD 84.99/barrel. European natural gas futures fell more than 6% to below US $850/thousand cubic meters, the first time since February 21.

After the Christmas holiday, US stocks developed individually. The Dow rose 0.11%, while the Nasdaq and the S&P 500 closed down 1.38% and 0.38% respectively. Popular Chinese stocks rose, with new energy vehicles and clean energy sectors leading the decline. The NASDAQ China Golden Dragon Index rose 2.06%, Alibaba and JD.com both rose more than 4%, and Weilai Automobile closed down more than 8%. The decline of US technology stocks remained, with Apple hitting a new low in the second half of the year. Tesla closed down about 11.5%, the biggest one-day drop since April 26 this year.

Most European stocks ended higher, with Germany's DAX30 index up 0.40%, Britain's FTSE 100 index up 0.05%, France's CAC40 index up 0.70%, Europe's Stoxx 50 index up 0.44%, and Italy's FTSE MIB index down 0.09%.

Market Focus

1. Putin counteracted the West's Russian oil price limit measures: signed an order banning the supply of oil to customers who comply with the price cap. But no mention of production cut measures.

2. U.S. home sales slowed because home prices fell for the fourth consecutive month.

3. UN forecast: India will become the most populous country in 4 months.

4. H1N1 influenza cases are seen in all regions of Russia.

5. According to Kyodo News Agency: Japanese government considers lowering the new coronavirus to the lowest disease emergency level next spring.

6. U.S. cold snap: New York State enters state of emergency, Total Energy restarts Port Arthur, Texas refinery, and at least 63 people die.

7. Gold was strong yesterday, hitting a new high in the last six months; oil prices erased a 2% gain after Putin announced countermeasures to the Russian oil cap; U.S. tech stocks declined, with Apple hitting a new closing low for the second half of the year and the Dow performing relatively solidly.

Geopolitical Situation

Conflict Situation：

1. The Ukrainian side said it repulsed the Russian offensive near eight settlements in Luhansk and Donetsk.

2. Russian Defense Ministry: Russian troops struck Ukrainian artillery systems and intercepted Ukrainian drones in many places, including Donetsk; struck more than a hundred Ukrainian troops and dozens of their military vehicles in the direction of Kupyansk, Red Liman and Donetsk.

3. Head of the Kharkov regional military administration: there are still 29 settlements occupied by Russia, less than 2% of the territory of the region.

4. The Ukrainian border guards have found no signs of Belarusian strike force formation.

Energy Situation：

1. Putin issued a decree prohibiting the supply of oil to customers who comply with Western price caps, which was effective from February 1 to July 1 of next year.

2. Ukrainian Energy Minister: In view of such intensive destruction of energy facilities by Russia, a completely new energy system will be established.

Institutional Perspective

1. Goldman Sachs：Goldman Sachs has raised its growth estimate for China next year to 5.2% from 4.5%, as the economy is expected to recover significantly next year, driven by a low base and the epidemic prevention and control optimization measures exceeding expectations. The main factor driving China's economic growth next year will shift to consumption, with the most epidemic-constrained consumption sectors, such as travel and entertainment, having the most room for rebound. In addition, favorable factors such as improved growth expectations next year are expected to drive a modest strengthening of the RMB against the USD. The Goldman Sachs equity strategy analyst team is also bullish on domestic and foreign-listed Chinese stocks in the Asia-Pacific regional markets, maintaining its overweight recommendation on A-shares and Hong Kong stocks.

2. SOCIETE GENERALE：As the Bank of Japan stimulates hedging, the yen's spike is just beginning.

Societe Generale said Tuesday's announcement by Bank of Japan Governor Haruhiko Kuroda to double the ceiling on 10-year government bond yields, a sudden policy adjustment that shocked markets and also increased pressure on the country's international investors to hedge their foreign assets, is expected to further push up the yen's exchange rate. Juckes, chief foreign exchange strategist at Societe Generale, said the dollar-yen exchange rate could fall to 125 in January next year as Japanese fund managers slowly adapt to the Bank of Japan's tougher stance, with the pair falling more than 3 percent on Tuesday, meaning the yen will rise another 6 percent from current levels in the future.

3. MUFG：The British pound has room for further weakness against the euro.

Mitsubishi UFJ Financial Group said the pound has room for further weakness against the euro, as the European Central Bank may tighten monetary policy more than the Bank of England next year. So far, the pound is still the third worst performing currency in the G10. On the other hand, so far this year, the euro has topped the performance of the G10 currencies, with only the dollar and the Swiss franc performing better than the euro. Considering the Russian-Ukrainian conflict and the current recession that the Eurozone may be in, the euro's performance in the G10 currencies can be quite bright.

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