May 15, 2023 - Fundamental Reminder

☆At 20:30, USD NY Empire State Manufacturing Index (MAY)

The market expects it to record -2.5, which was significantly lower than last month's 10.8.

☆At 20:30, the 2023 FOMC Voting Commission and Chicago Fed Chairman Goolsby will be interviewed by CNBC. Pay attention to whether it will continue to raise concerns about CPI data and banking issues in the US region.

☆At 20:45, Atlanta Federal Reserve Chairman Bostic delivers a welcoming speech at a meeting hosted by the Atlanta Federal Reserve. Pay attention to whether his comments will mention his views on the Fed's future steps.

☆At 21:15, the 2023 FOMC Voting Commission and Minneapolis Fed Chairman Kashkari will deliver a speech. Kashkari had previously stated that inflation has decreased but is stubborn, and may have to persist in high interest rates for a long time.

Market Overview

Review of Global Market Trend

Last Friday, spot gold fell first and then rose, narrowly holding the $2000 mark; However, during the US trading session, there was a slight rebound and it briefly reached the 2020 level, ultimately closing 0.2% lower, ending two weeks of continuous gains and closing at $2010.86 per ounce. Spot silver plummeted significantly during the day and expanded its decline during the US session, ultimately closing down 0.89% at $23.96 per ounce. Silver fell by over 6% this week, marking its worst weekly performance in seven months.

The US dollar index rose significantly last Friday, standing above the 102 level and briefly reaching an intraday high of 102.74. It eventually closed up 0.63% at 102.70. In addition, the US dollar index recorded its largest weekly increase since February last week.

The yield of US Treasury bonds has significantly increased compared to the US dollar index, and the two-year US Treasury bond yield briefly returned above 4%, ultimately closing at 3.991%; The 10-year US Treasury yield briefly rose to an intraday high of 3.470%, ultimately closing at 3.462%.

In terms of crude oil, investors may weigh back and forth between supply concerns and economic recession concerns, with both oil prices falling by more than 1% and closing lower for the fourth consecutive week. WTI crude oil showed a roller coaster trend during the day and fell near the $70 level during the US session, ultimately closing down 1.91% at $70.03 per barrel; Brent crude oil ended down 1.61% at $74.17 per barrel.

The US stock market closed slightly lower, with the Dow down 0.03%, the Nasdaq down 0.36%, and the S&P 500 index down 0.16%. Most sectors of the market fell, with cruise stocks and popular Chinese concept stocks leading the decline. Xiaopeng Automobile closed down about 9%, while JD.com closed down about 6%.

European stocks rose overall, with the German DAX30 index rising 0.5%; Britain's FTSE 100 Index closed up 0.31%; The European Stoxx 50 index closed 0.19% higher.

Market Focus

1. Biden: He believes that the debt ceiling meeting with McCarthy will be held on Tuesday (May 16th) and remains optimistic about the negotiations.

2. British media: G7 and the European Union plan to ban the restart of Russia's natural gas pipelines to Poland and Germany.

3. Members of the Iranian Parliament: Iran and Egypt are about to reopen their embassies to each other.

4. Turkish media: Turkish President Recep Tayyip Erdogan won less than 50% of the votes in the presidential election, and 88.59% of the votes have been counted.

5. The Progressive Party has temporarily taken the lead in the 97% vote count for the lower house elections in Thailand.

6. Iraq: Proved crude oil reserves have increased by 10 billion barrels.

7. Argentina has experienced a historic drought, which could directly reduce its GDP by $19 billion in 2023.

8. Super cyclone storm “MOCHA” has landed in Rakhine State, Myanmar, and many areas have been severely affected.

Geopolitical Situation

Conflict Situation：

1. According to the online map data of the Ministry of Digital transformation of Ukraine, air defense alerts have been issued throughout Ukraine.

2. Foreign media reported that four Russian military aircraft were suspected to have been shot down in the same area within a day, with the crash location in the Bryansk region of Russia, about 50 kilometers from the Russia Ukraine border. All personnel on board have died.

3. The Kyiv Independent: the Ukrainian air force shot down 25 Russian UAVs and 3 missiles overnight. However, the Governor of Jernopol reported that at 5am local time, some cruise missiles failed to intercept and hit the civilian infrastructure of Jernopol.

4. Russia claims that two of its military commanders have been killed near Bakhmut in eastern Ukraine.

5. Russian Ministry of Defense: The Ukrainian army and Western weapons depots in Petropavlovka and Ternopol were attacked; Ukraine is attempting to break through its defenses in the north and south of Bakhmut.

Assistance Situation：

1. Ukrainian intelligence agencies are expected to receive over 100 German Vector drones.

2. According to Agence France Presse: Zelensky urged Germany to support the delivery of fighter jets from Western countries.

3. French media: Zelensky made a surprise visit to Paris on Sunday evening to hold talks with French President Markron to discuss “urgent military needs”. France has promised to provide Ukraine with more light tanks and armored vehicles. 

MHMarkets

Institutional Perspective

01

Goldman Sachs

Most importantly, the policy stance of the Bank of England is no longer an outlier in the G10, and its previous negative impact on the pound has shifted to a positive impact. We recommend investors to go long on GBPEUR.

02

SOCIETE GENERALE

The feeling of overvaluation of the US dollar will not be easily shaken off

On May 12th, Kit Juckes, Chief Global Foreign Exchange Strategist at Societe Generale, said that the intraday trend of the US dollar was acceptable, but its valuation was not. The rebound in the yen is only a matter of waiting for the Bank of Japan to take action. The current global economic or geopolitical conditions are insufficient to justify the US dollar holding onto most of its gains from 2021 to 2022. On a daily basis, positions, yield trends, geopolitical uncertainties, and economic data trends all indicate that the US dollar may remain within a narrow range for a period of time. However, the feeling that the US dollar is overvalued is not easy to get rid of. The rebound in the yen is just a matter of waiting for the Bank of Japan to take action, and this feeling is also the same.

03

MUFG

The recent developments are weakening the market's optimism about the economic growth prospects outside the United States, which will help provide more support for the US dollar.