Mohicans markets：MHM Today News

☆ 11:00 BOJ releases interest rate resolution and outlook report; 14:30 BOJ Governor Haruhiko Kuroda holds a press conference. Market bets on the BOJ to change its policy, since January in order to maintain the 10-year Japanese bond yield ceiling at 0.5%, the BOJ has purchased a volume of about 13 trillion Japanese bonds; this rate of bond purchases is unsustainable, and the BOJ's yield control policy has been completely ineffective.

☆ 17:00 IEA publishes its monthly crude oil market report, which will reveal the strength of oil demand.

☆ 18:00 Eurozone publishes the final annual rate and monthly rate of December CPI.

☆ 21:30 The U.S. releases annual and monthly rates of December PPI and monthly rate of December retail sales. Investors fear that the U.S. economy is in recession, which will use the data to speculate on the scale of interest rate hikes in February.

☆ The following day 02:00 Fed George speaks on the Fed and the economy.

☆ The next day 03:00 Federal Reserve Harker speaks on the economic outlook.

☆ The following day 06:00 Fed Logan speaks.

Market Overview

Review of Global Market Trend

On Tuesday, January 17, the dollar index still hovered at a seven-month low, closing down 0.17% at 102.38. The European Central Bank is considering slowing interest rate hikes to 25 basis points in March, causing the euro to lose 1.08 against the dollar; the pound rose more than 0.9% against the dollar, rising to a daily high of 1.23; the dollar continued to fall against the yen before the Bank of Japan's resolution, with the 128 mark in jeopardy.

Ten-year U.S. bond yields rose more than 7 basis points to a maximum of 3.59%, and two-year U.S. bond yields turned from up to down, falling as much as 6 basis points to 4.18%. Japan-based bond yields exceeded the policy ceiling for the third consecutive day. Markets are betting on a continued hawkish turn in Japanese monetary policy, less easing, or an announcement to end the YCC yield curve control policy.

Gold's long trend corrected, with spot gold closing down 0.38% at $1,908.71 per ounce and spot silver closing down 1.42% at $23.93 per ounce.

Influenced by China's GDP data that exceeded expectations, WTI crude oil continued to rise above $81, closing up 2.54% at $81.01 per barrel, and Brent crude oil closed up 3.17% at $86.64 per barrel. European natural gas rebounded from a one-and-a-half-year low, and U.S. natural gas rose nearly 11% intraday to close up nearly 5%. Weather forecasts indicate that a “polar vortex” could sweep through the United States.

U.S. stocks were split, with the Dow closing down 1.14%, the Nasdaq closing up 0.14%, and the S&P 500 closing down 0.22%. Tesla closed up 7.4%, Morgan Stanley closed up 5.8% and Goldman Sachs closed down 6.4%. The Dow was dragged down by the second largest weight, Goldman Sachs, which fell 8% at its deepest and closed down over 6% for its worst single day in nearly a year.

European stocks generally closed higher, the European Central Bank to consider slowing down the news of interest rate hikes to help European stocks stopped falling and turned up. Germany's DAX30 index closed up 0.33%, Britain's FTSE 100 index closed down 0.09%, France's CAC40 index closed up 0.48%, the European Stoxx 50 index closed up 0.42%, Spain's IBEX35 index closed up 0.17%, Italy's FTSE MIB index closed up 0.30%.

Market Hotspots

1. The Russian Central Bank began to carry out currency swaps to provide RMB, with a daily limit of 10 billion yuan.

2. OPEC monthly report: the growth rate of global crude oil demand in 2023 is predicted to be 2.22 million barrels per day; The global economic growth is expected to be 2.5% in 2023.

3. Russian sources: Russia is expected to increase crude oil exports in 2023. Russia expects that sanctions will have an impact on oil products.

4. Data: The US Federal Reserve's manufacturing index in January recorded - 32.9, the lowest since May 2020. Canada recorded a monthly CPI rate of - 0.6% in December, the largest decrease since April 2020.

5. Apple released the first batch of new products in 2023. MacBook Pro and Mac mini are equipped with the latest M2 chip.

6. Sources: After the European Central Bank raised interest rates by 50 basis points in February, it may slow the rate increase to 25 basis points in March.

7. The US White House: Congress must unconditionally solve the debt ceiling issue. Failure to repay the debt will lead to economic disaster.

8. The US and Europe held consultations on the Inflation Reduction Act, but no substantive achievement were achieved.

Geopolitical Situation

Conflict Situation:

1. Prime Minister of Ukraine: 9 thermal power plants in Ukraine were damaged by the Russian missile attack.

2. The death toll from the attack on the apartment building in Dnipro, Ukraine, increased to 43.

3. The Russian authorities in Donetsk confirmed that the Russian army has controlled the town of Soledar.

4. Russian Minister Shoigu inspected the “Eastern” force headquarters participating in the special military operation.

Sanctions:

1. Putin signed a decree allowing some Russian companies to ignore the votes of shareholders from “unfriendly” countries.

2. Russian Foreign Ministry: In response to the ninth round of EU sanctions, Moscow has expanded the list of European officials banned from entering Russia.

3. President of the European Commission Frederick von Klein stated that the EU vowed to launch the 10th set of sanctions against Russia, mainly focusing on closing the loopholes in the measures already taken.

Energy situation:

1. President of the European Commission von der Leyen: The EU has replaced 80% of Russia's pipeline natural gas.

2. Putin: Despite the sanctions, Russia's oil production has increased by about 2%.

3. Senior Russian sources: Russia is expected to increase crude oil exports in 2023, and it is expected that sanctions will have an impact on oil products.

4. The Ukrainian National Energy Company (Ukrenergo) announced on the 17th that due to the serious power shortage, emergency power cuts were implemented in six regions throughout Ukraine.

Assistance:

1. German Deputy Prime Minister and Minister of Economy Habak: Ukraine must be given all the equipment necessary to win this battle.

2. The European Commission paid Ukraine the first loan of a total of 18 billion euros of macro financial loans, amounting to 3 billion euros.

3. Spanish Foreign Minister: At present, Spain has no plan to provide Panther tanks to Ukraine.

4. Prime Minister Mark Rutte of the Netherlands: The Netherlands will provide the Patriot missile defense system to Ukraine.

5. German Prime Minister Schultz: Ukraine will continue to be provided with weapons.

6. The US White House: Biden and German Prime Minister Schultz discussed the issue of assistance to Ukraine.

7. Market news: Australia will provide personnel to help train the Ukrainian army.

8. Polish President Duda: Warsaw has handed over 260 T-72 tanks of different models to Kiev.

Institutional Perspective

01

Goldman Sachs

The US job market is rebalancing, but it has a long way to go.

02

SOCIETE GENERALE

High interest rates may support the euro throughout the year.

Kit Juckes, chief global foreign exchange strategist of SOCIETE GENERALE , believes that unless there is new progress in the geopolitical situation, we should buy the euro on a bargain basis. If the Russian-Ukraine conflict had not affected inflation and economic growth, public finance and terms of trade in Europe, the euro should now show a clear upward trend against the dollar, approaching 1.20. Of course, the direct impact of the conflict on the economy and the negative impact of the exposure of the European energy crisis on confidence are important. However, if the impact of the conflict does not intensify or disappear completely, our interest rate forecast proves that the euro/dollar will have a four-digit increase this year, which is consistent with our forecast that the euro/dollar will rise to 1.12 at the end of the year.

03

MUFG

US CPI data needs to rise unexpectedly to support the US dollar and change market expectations.

Economists from MUFG said that the US CPI data tonight is expected to further confirm that the inflation pressure is continuing to ease. It is expected that the monthly rate of overall inflation will fall by 0.1% and the monthly rate of core inflation will record a moderate growth of 0.3%. Before the release of the US CPI data, the market was inclined to believe that the Federal Reserve would further slow the pace of interest rate increase to 25 basis points at the next meeting, and the terminal interest rate would remain below 5%. Only if there is a sharp upward surprise in today's data can we change these expectations and prevent the dollar from further downward revision.