MHMarkets ：MHM Today News

☆ Today, HSI Corporation will announce the results of the Hang Seng Index Series review for the first quarter of 2023. Changes to the constituent stocks of the Hang Seng Index Series will be effective on Monday, June 5, 2023.

☆ President Biden and congressional leaders were scheduled to meet again today on the debt ceiling, but this schedule has been postponed to next week.

☆The U.S. will release May one-year inflation expectations and the preliminary May University of Michigan Consumer Confidence Index.

Market Overview

Review of Global Market Trend

On Thursday, spot gold rose and then fell after data showed a jump in U.S. initial jobless claims last week and the smallest year-over-year increase in April PPI data in more than two years, gold prices rose slightly; but it soon gave back all the gains and once fell to an intraday low of 2011.19, finally closing down 0.76% at $2014.96 per ounce. Spot silver fell more than 4% during the day, eventually closing down 4.77% at $24.18 per ounce.

The U.S. dollar index moved sharply upward and stood at the 102 mark, eventually closing up 0.64% at 102.06, a new high of more than a week; U.S. bond yields have fallen, the two-year U.S. bond yield, which is more sensitive to the interest rate outlook, once fell to 3.810%, eventually closing at 3.899%; the 10-year U.S. bond yield fell below 3.4%, eventually closing at 3.386%.

Perhaps worried about the U.S. debt ceiling and weak economic data, crude oil gave back some of its gains from the previous days. WTI crude oil extended its losses in the European session and tested the $70 mark in the U.S. session, eventually closing down 1.86% at $71.39 per barrel; Brent crude oil narrowly missed $75, eventually closing down 1.52% at $75.36 per barrel.

The U.S. Dow closed down 0.66%, the S&P 500 closed down 0.17%, and the Nasdaq closed up 0.18%. The Nasdaq China Golden Dragon Index closed higher by 3.82% and the JDcom closed up about 7% after earnings. Westpac Hutchison closed down about 23%.

European stocks were mixed, Germany's DAX30 index closed down 0.39%; Britain's FTSE 100 index closed down 0.14%; Europe's Stoxx 50 index closed up 0.07%.

Market Focus

1. Biden's debt ceiling meeting with McCarthy was postponed until next week, and staff will continue to pick up the pieces. Schumer said the negotiations are making progress.

2. Iraqi oil minister: will resume oil exports via Ceyhan, Turkey, on May 13.

3. The U.S. Energy Secretary said he will seek to replenish oil war reserves after the end of the congressionally mandated SPR sale at the end of June. The timing of this disclosure is earlier than market expectations.

4. On the 11th local time, the two sides of the Sudanese conflict signed an agreement in the western Saudi city of Jeddah, agreeing on some principle issues.

5. U.S. initial jobless claims for the week to May 6 recorded 264,000, which was a new high since the week of October 30, 2021.

6. Fed's Kashkari: Inflation falling but stubborn, which may have to stick with maintaining high interest rates for a long time. Now is not the time to change the 2% inflation target.

7. WHO: Monkeypox outbreak no longer constitutes a “public health emergency of international concern”.

8. The Bank of England raised interest rates by 25 basis points, sharply raised GDP expectations and believes that the rate of decline in inflation will slow. Governor Bailey said the Bank must remain steadfast in raising interest rates. If inflation persists, more tightening measures will be needed.

9. Westpac United Bank: Deposits fell last week and pledged more assets to the Federal Reserve to increase borrowing capacity. Plans to complete a strategic asset sale in the second quarter. The bank's U.S. shares closed down 22%.

10. FDIC: Expect large banks to face billions of dollars in additional deposit insurance fund costs to cover losses from Silicon Valley, Signature Bank failures.

11. OPEC monthly report: OPEC oil production fell 191,000 bpd in April to 28.6 million bpd. China's oil demand is expected to increase by 800,000 bpd in 2023.     

Geopolitical Situation

 Energy Situation：

1. Bank of Russia: Ural crude spread to Brent narrowed to $25 per barrel as of April from $34 per barrel in January-February; lowered export forecast due to downward revisions to gas prices and non-oil gas export expectations.

3. OPEC monthly report: Russian crude oil production fell by 0.3 million bpd to 9.7 million bpd in March. 

MHMarkets

Institutional Perspective

01

Goldman Sachs

The BoE's Monetary Policy Committee is expected to raise rates by another 25BP to 4.5%, with a terminal rate of 5%.

On May 11 -- We expect the Bank of England's Monetary Policy Committee to raise rates by another 25 BP to 4.5% on the benchmark rate, as recent data on inflation and economic activity have been surprisingly high. Our baseline scenario forecast is for a 25 bps rate hike to be approved by a 7-2 majority, with members Dhingra and Tenreiro supporting keeping rates unchanged. In our view, a 50BP hike is unlikely as the UK economy has made some progress in rebalancing the labor market and slowing underlying inflation, and the MPC no longer sees risks to the inflation outlook as clearly skewed to the upside. We expect the BoE to continue to raise rates by 25 bps after May until the 5% terminal rate is reached in August.

02

SOCIETE GENERALE

Kit Juckes, Chief Global FX Strategist, Societe Generale:

The U.S. economy is gradually slowing from its high growth rate, and while it's hard to quantify how long it will take for the U.S. economy to stall, the dollar's downside performance is intact. However, it should be a four steps down and three steps up kind of move for the dollar to move.

03

MUFG

A 25 basis point rate hike is expected to moderate double-digit inflation; this week's rate meeting is not expected to weigh on the pound, which remains the best-performing G10 currency in 2023.