Mai hui MHmarkets: July 14, 2023 - Fundamental Reminder

☆ At 20:30 Beijing time, the United States will release the Import Price Index MoM (JUN); At 22:00 Beijing time, the United States will release the 1 Year Inflation Expectations (JUL) and the Michigan Consumer Confidence Prel (JUL).

Market Overview

Review of Global Market Trend

On Thursday, spot gold hovered near a one-month high after data showed inflation cooled but the labor market remained tight, eventually ending up 0.17% at $1960.49 an ounce, a near one-month high. Spot silver rallied sharply, gaining for two straight days to end up 3.02 percent at $24.87 an ounce. The gold-silver ratio fell to a two-month low.

The dollar index fell below 100 for the first time in 14 months on expectations that the Federal Reserve may soon end its rate hike cycle, ending down 0.833 percent at 99.76, its lowest level in more than a year. The yield on the 10-year Treasury note continued to fall, closing at 3.767 percent. Non-us currencies rallied across the board, with USD/JPY losing 138 for the first time since May 22; Eur/USD stands at 1.12 for the first time since March last year; GBP/USD stands above the 1.31 mark for the first time since April 14, 2022.

International crude oil rose for the third day in a row to a nearly three-month high due to the depreciation of the dollar and the suspension of production at Libya's second largest oil field. WTI crude rose to $77 a barrel for the first time since April 26 and ended up 1.79% at $77.17; Brent crude settled up 1.7% at $81.47 a barrel.

Major U.S. stock indexes closed higher, with the Nasdaq and S&P 500 unilaterally higher throughout the day, closing up 1.5 percent and 0.8 percent, respectively, while the Dow lagged behind growth stocks, edging up 0.14 percent. Cryptocurrency stocks surged, with Coinbase closing up about 25% at a one-year high, MicroStrategy up 11% and Riot Blockchain up 15%. Nvidia continues to hit a record high, with a market value of more than $1.13 trillion. The Nasdaq China Golden Dragon Index closed up 2.5 per cent, snapping a five-session winning streak, as Alibaba gained nearly 3 per cent and Pinduoduo continued its strength to close up 7.5 per cent. Nio bucked the trend, closing down 3.5%, 7% and 2%, respectively.

Major European stock indexes closed higher, with Germany's DAX30 up 0.74%, Britain's FTSE 100 up 0.32% and the Euro Stoxx 50 up 0.72%.

Market Focus

1. Fed - Eagle Bullard resigned as president of the St. Louis Fed today, that is, will no longer attend this month's meeting, will become dean of business school, Daly: Expect one or two more rate hikes, when inflation is close to 2%, want to start moving toward neutral interest rates.

2. Ukrainian official: Received cluster munitions from the United States.

3. The FTC, a US regulator, today announced a formal investigation into ChatGPT.

4. European Council President: The EU will allow imports of products from Japan's Fukushima region.

5. Australian media: Australia will not reappoint Lowe as governor of the Reserve Bank of Australia.

6. Canada's West Coast port strike is over, but supply chains will take weeks to recover.

7. Us media: Goldman Sachs may post its worst quarterly report in years due to writedowns in its commercial real estate business.

8. Due to local protests and other factors, Libya's two oil fields with a combined output of 370,000 barrels per day have been limited.

9. The IEA monthly report and Opec monthly report both lowered their forecasts for global oil demand growth this year to 2.2 million b/d and 2.44 million b/d respectively.

10. Russian Deputy PM Vladimir Novak: Russia will focus on cutting oil exports in August, maintaining 2023 oil production forecast at 515 million tonnes.

11. The US dollar index fell below 100 for the first time in 14 months, the US Treasury 2Y fell 11BP in a day, the Nasdaq index closed up 1.5% overnight, and Chinese stocks strengthened for 5 consecutive days.

12. Us PPI data fell in June, registering 0.1 per cent year-on-year, the lowest in three years. The US budget deficit soared 170 per cent year on year and debt servicing costs hit $652bn.

13. XRP jumped more than 70%, while Coinbase rose more than 25% to a nearly one-year high, after a U.S. judge ruled that XRP was not necessarily a security; Europe's first bitcoin ETF is expected to go public this month.

Geopolitical Situation

Conflict Situation

1. Putin: foreign tanks supplied to Ukraine are a priority target for the Russian army.

2. Russian Ministry of Defense: Russian troops used sea-based high-precision weapons to strike a number of Ukrainian ammunition depots and repelled a number of Ukrainian attacks in the directions of Kupyansk, Hongriman, Donetsk, Zaporizhzhya, Kherson and other areas, striking Ukrainian tanks, artillery, anti-artillery radar and other targets. Russian air defenses also intercepted a number of Hymas rockets and drones of the Ukrainian army.

3. The General Staff of the Ukrainian Armed Forces: The Ukrainian forces struck Russian air defence missile systems, electronic warfare systems and other targets, intercepted Russian Caliber cruise missiles and a number of drones, and carried out a number of air strikes against Russian positions.

Food Situation

1. Putin: the extension of the food agreement is still under consideration. We can withdraw from the grain deal until the other parties fulfill their commitments.

2. Russian Foreign Minister Lavrov: I haven't heard of any new proposals on the Black Sea grain deal.

3. EU Spokesman: The European Commission's priority is to ensure that Ukrainian grains have access to world markets.

4. Kremlin Spokesman: no final decision has been made on withdrawal from the black sea grain deal.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs is about to report its worst quarterly earnings in years. Write-downs on its green consumer lending business and commercial real estate assets could exceed $2 billion. Returns on equity are in the single digits.

02

SOCIETE GENERALE

Societe Generale: For EURUSD to move back above 1.10, the USD CPI MoM may need to fall to 0.2%.

03

MUFG

MUFG: Non-farm payrolls data won't make Fed more hawkish in the second half of the year.