Mai hui MHmarkets: July 10, 2023 - Fundamental Reminder

☆ At 9:30 Beijing time, CNY Inflation Rate YoY (JUN).

Institutions expect CPI inflation to remain low year-on-year in June and is expected to turn upward in the second half of the year.

☆At 23 :00, 2025 FOMC Voting Committee, Cleveland Fed President Mester, 2024 FOMC Voting Committee, San Francisco Fed President Daly speak. Both officials are seen as hawkish, and Daly has said two more rate increases this year are a “very reasonable” forecast.

☆At 23 :00,BOE president Bailey speaks. On Sunday, Mr. Bailey stressed the rationale for a 2% inflation target and said it was important not to mislead people into thinking the BOE was no longer pursuing the 2% target.

Market Overview

Review of Global Market Trend

On Friday, spot gold extended intraday gains to as high as $1,934.89 before easing to settle up 0.71 per cent at $1,924.28, its first weekly gain in four weeks, after a surprise June payrolls data raised questions about the Fed's trajectory for rate hikes beyond July. Spot silver stood above the 23 mark and ended up 1.39 percent at $23.05 an ounce.

The dollar index retreated to a more than two-week low and was last down 0.824% at 102.28. The 10-year Treasury yield reversed into a V-shape to end at 4.066%.

Brent crude rebounded for the second week in a row to hit a nine-week high as the dollar weakened and Saudi Arabia reaffirmed its commitment to stabilize the market. WTI crude oil finally settled up 2.58% at $73.63 per barrel; Brent crude settled up 2.33% at $78.22 a barrel.

U.S. stocks opened slightly lower before recovering, with the Dow down 0.55 percent, the S&P 500 down 0.28 percent and the Nasdaq down 0.13 percent. The Nasdaq China Golden Dragon bucked the market by closing 3.2% higher, with Alibaba up more than 8%, Lufax up more than 6% and JD.com up 4.9%.

Major European stock indexes were mixed, with Germany's DAX30 closing up 0.48 percent, Britain's FTSE 100 down 0.32 percent and Europe's Stoxx 50 up 0.32 percent.

Market Focus

1. The EU and New Zealand sign a free trade agreement.

2. French Finance Minister Le Maire: Tesla is expected to build a factory in France.

3. Strikes continue in British Columbia, Canada, affecting shipments worth C $4.6 billion.

4. In the first half of this year, 6.28 million inbound tourists arrived in Singapore, and the tourism industry recovered steadily. The number of Chinese tourists visiting Singapore increased by 1,122% year-on-year.

5. Dutch Prime Minister Mark Rutte will face a no-confidence vote on July 10 local time, and the country's cabinet government announced its resignation on July 7.

Geopolitical Situation

Conflict Situation

1. Russian Defense Ministry: Russian air defense systems shot down 10 Ukrainian drones in one day and night.

2. Russian Defense Ministry: Russian forces fought with Ukrainian troops and Ukrainian mercenaries in multiple directions, including Kupyansk, destroying Ukrainian tanks, armored vehicles, Czech-made Vampire multiple rocket launchers, U.S.-made Paladin self-propelled artillery and M777 The U.S.-made Paladin and M777 artillery guns, U.S.-made anti-artillery radar, and several other U.S. Army equipment and facilities were destroyed.

3. General Staff of the Armed Forces of Ukraine: The Ukrainian Air Force, missile and artillery units conducted strikes against Russian manpower and equipment concentrations, artillery positions, and electronic warfare equipment.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: The BOE is now expected to make a 25 basis point rate hike in November and has raised its terminal rate forecast to 6% versus its previous forecast of 5.75%. While the current macro environment for industrial metals remains depressed, the copper economy continues to show significant strength in demand trends. We expect the nickel market to continue to be oversupplied this year and next.

02

SOCIETE GENERALE

Societe Generale expanded its U.S. fixed income team as interest rates climbed.

03

MUFG

【MUFG: Non-farm payrolls data will not make the Fed more hawkish in the second half of the year】

MUFG analyst George Goncalves, said the Fed may consider this a balanced non-farm payrolls report that shows more of the true picture of the labor market, where employment trends are softening from the hot pace seen earlier this year, while wage growth remains hot. That won't affect the July rate hike, but it won't leave them with a more hawkish stance in the second half of the year either.