Mohicans markets：MHM Today News

February 21, 2023 - Fundamental Reminder

☆ Today, the European Union will hold a meeting of energy ministers from EU countries, and please watch for an extension of its emergency measures to reduce gas demand.

☆ Later today, Russian President Vladimir Putin will deliver a state of the nation address. Russian Presidential Press Secretary Peskov has said that Putin will comment on special military operations and the international situation in his state of the nation address.

☆ Reminder: At 3:30 am on Wednesday, NYMEX New York crude oil March futures are affected by the shift for the month, the last trading on the floor will be completed at 3:30 on February 22 and the last trading on the electronic market will be completed at 6:00 am; please pay attention to the expiration for the month announcement on the trading floor to control the risk. In addition, U.S. oil contract expiration time on some trading platforms is usually one day earlier than the official NYMEX, please pay more attention.

Market Overview

Review of Global Market Trend

On Monday, spot gold maintained a narrow range during the day, rising as high as $1,847.39 before finally closing down 0.05% at $1,841.34 per ounce. Spot silver closed up 0.43% at $21.82 per ounce.

The dollar index fell below the 104 mark and closed down 0.06% at 103.88. 10-year U.S. bonds were closed for the day.

In terms of crude oil, the two oils rebounded during the day. WTI crude oil rallied back above $77, eventually closing up 1.06% at $77.36 per barrel; Brent crude oil closed up 0.86% at $83.68 per barrel.

U.S. stocks were closed for the day yesterday due to the U.S. Presidents' Day.

European stocks were mixed, Germany's DAX30 index closed down 0.03% at 15,477.55 points; Britain's FTSE 100 index closed up 0.12% at 8,014.31 points; Europe's Stoxx 50 index closed down 0.09% at 4,271.18 points.

Market Focus

1. Putin is expected to deliver his State of the Union address at 5:00 p.m. Beijing time today (the 21st).

2. Biden made a surprise visit to Kiev, the capital of Ukraine, and met with Zelensky. The whole visit lasted about 5 hours. He informed Russia a few hours before his departure.

3. For the first time, the EU carbon emission price exceeded 100 euros/ton.

4. India's oil imports from Russia climbed to a record 1.4 million barrels per day in January, up 9.2% from December.

5. The ROK military detected the DPRK firing two unidentified ballistic missiles into the east sea of the peninsula from the Sukchon area of South Pyongan Province on the morning of the 20th local time.

6. Vice President of the Swiss Central Bank: If the Swiss franc depreciates, we will be prepared to sell foreign exchange, and vice versa.

Geopolitical Situation

Conflict situation:

1. Biden made a surprise visit to Kiev, the capital of Ukraine, and met with Zelensky. The whole visit lasted about 5 hours, and Russia was informed several hours before the trip.

2. Biden's Air Force One landed in Warsaw, the capital of Poland.

3. Before Biden's visit to Kiev, the United States contacted Russia to eliminate the misjudgment that may lead to direct confrontation between the two countries. On the same day, as the Russian MiG fighter plane took off, air strike warnings were sounded across Ukraine.

4. Russian Ministry of Defense: The Russian army has fully controlled the village of Paraskovivka near Bachmut.

Assistance:

1. Since December 2021, NATO countries have sent 1170 air defense systems, 440 tanks, 1510 infantry combat vehicles and 655 artillery systems to Ukraine. Russian Foreign Intelligence Agency: Most of the military equipment supplied by the West to Ukraine has been destroyed by the Russian army.

2. The United States will provide assistance worth US $500 million to Ukraine, which will be officially announced to the outside world on the 21st. The assistance includes the provision of military equipment such as Haima rocket, anti-tank system and radar.

3. According to the Russian satellite network: Biden said that the United States and the allies had promised to deliver about 700 tanks, thousands of armored vehicles and more than 2 million artillery shells to Ukraine.

4. Prime Minister Shmyhal of Ukraine: He met with IMF President Georgieva. We hope to obtain the IMF's multi-year support fund worth 15 billion US dollars.

5. Italy is open to providing war planes to Ukraine with its western allies. If Western allies start to act, Italy is ready to provide Ukraine with five fighter planes.

Institutional Perspective

01

Goldman Sachs：Goldman Sachs: raise the terminal interest rate of the European Central Bank to 3.5%

Recently, economists at Goldman Sachs raised the expectation of the European Central Bank's terminal interest rate to 3.5%, on the grounds that the position of policy makers, including the Executive Director of the European Central Bank, Schnabel, is expected to be stronger. Goldman Sachs expects the European Central Bank to raise interest rates by another 25 basis points in June. At present, the deposit rate of the European Central Bank is 2.5%. Policymakers have expressed their intention to raise interest rates by another 50 basis points next month. Finally, Goldman Sachs said that it was “still possible” for the European Central Bank to raise interest rates by 50 basis points in May, but now it is more likely to raise interest rates by 25 basis points.

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.