MHMarkets：December 19, 2023,--Fundamental Reminder

08:30 AUD RBA Meeting Minutes (DEC)

11:00 JPY BOJ Interest Rate Decision

The market is expected to continue to “stay put”.

14:30 BOJ Gov Kazuo Ueda Press Conference

18:00 EUR CPI Data (NOV)

21:30 USD Housing Starts (NOV) & USD Building Permits (NOV)

At 01:30 the following day Atlanta Fed President Bostic Speech

Earlier he expected two rate cuts next year and a soft landing scenario can be realized.

At 03:30 the following day, New York crude oil futures for January will complete final trading on the floor.

At 05:30 the following day USD API Crude Oil Stock Change (DEC/15)

Market Overview

Review of Global Market Trend

On Monday, U.S. bond yields fell and then rose, with the 10-year U.S. yield dropping to a five-month low of 3.890% during the session before pulling up sharply before the U.S. market to close at 3.935%; the two-year U.S. yield, which is more sensitive to Fed policy rates, closed at 4.450%.

The dollar index was in a range and hovered above 102, eventually closing down 0.07% at 102.52.

Spot gold was also in a range, it was in the U.S. market once broke through the 2030 mark, but failed to stand here, and eventually closed up 0.37% at $2027.23 per ounce; spot silver failed to stand above the 24 mark, and eventually closed down 0.3% at $23.8 per ounce.

As the Red Sea merchant ship attack intensified, international crude oil rose nearly 2%. WTI crude oil rose to an intraday high of $74.58 during the session, and then retracted some of the gains, and ultimately closed up 1.5% at $72.81 per barrel; Brent crude oil was close to the $80 mark during the session, and ultimately closed up 1.42% at $77.95 per barrel.

The U.S. Dow edged up, the S&P 500 closed up 0.45%, and the Nasdaq closed up 0.61%. NVDA.O, GOOGL.O both rose 2.4%. The Nasdaq China Golden Dragon Index fell 0.9%, NIO.N rose 4.7%, EDU.N rose more than 5%, and BILI.O fell 4.6%.

Major European stock indexes were mixed. Europe's Stoxx 50 index closed down 0.62%, Germany's DAX 30 index closed down 0.6%, Britain's FTSE 100 index closed up 0.5%.

Market Focus

1. Cleveland Fed President Meister: market expectations for rate cuts “slightly ahead” of the Fed, and the next stage of the key to monetary policy needs to remain tight for how long. San Francisco Fed President Daley believes that three rate cuts may be needed in 2024. Chicago Fed President Goolsbee believes that the Fed should not act according to market reaction.

2. After the Houthi attack, the U.S. Secretary of Defense announced a multinational action to protect the Red Sea trade. Participating countries will conduct joint patrols in the Southern Red Sea and Gulf of Aden. Countries involved in the U.S.-led operation include the United Kingdom, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain. The Houthis say the U.S. has had indirect contact with them and has rejected U.S. offers in exchange for halting its operations in the Red Sea.

3. A growing number of large container shipping companies have had to withdraw from the sea as the Houthi armed group has stepped up its attacks on merchant ships in solidarity with Hamas. From BP to Maersk, companies transporting consumer goods, coal, corn and other bulk commodities, as well as energy products, face a longer voyage ahead. The Joint War Risks Committee, a leading insurance organization, on Monday circled a larger swath of the Red Sea considered the world's most dangerous waters, meaning ships transiting the waters will have to pay more in premiums for war risks. Such premiums have risen nearly ninefold since the first attack.

4. Russian President Vladimir Putin extended until July 2024 the sales ban against the crude oil price cap.

5. EU Statement: EU adopts 12th round of sanctions against Russia. Sanctions include diamonds, a new import ban on liquefied petroleum gas, and more.

6. Bank of Canada Governor makes clearest statement yet on rate cuts, Bank of Canada Governor McCollum expects the Bank of Canada to cut the overnight rate in 2024, but first needs to see months of downward momentum in core inflation.

7. Poll: Biden's approval rating drops to 34%, which was a record low.

Institutional Perspective

01

Bank of America

【Bank of America: Expecting the Fed to cut interest rates by 100 basis points in 2024, with the first action in March】

Bank of America economists increased the expected Fed rate cut next year to 100 basis points from 75 basis points, citing a faster-than-forecast decline in inflation. They expect four Fed rate cuts of 25 basis points each in March, June, September and December. Previously Bank of America had projected a total rate cut of 75 basis points, with quarterly cuts of 25 basis points starting in June. Economists cited slowing inflation and the central bank's shift to dovishness at its December meeting, where Fed Chairman Jerome Powell revealed policymakers discussed rate cuts.

02

Rabobank

【Rabobank: Positive outlook for the BOJ, raising expectations for the Japanese yen】

Rabobank raised its forecast for the yen as the likelihood of the BOJ removing negative interest rates next year increases, while the risk of interest rate cuts by other Group of 10 central banks also grows. The bank expects the yen to rise to 135 against the dollar over the next 12 months, compared with its previous forecast of 140.The yen was near the 142.81 level on Monday after touching its highest level in five months last Thursday. Jane Foley, senior foreign exchange strategist at the bank, said the yen appears to be on track for a better year in 2024 given the current likelihood of further policy normalization in favor of next year and the risk of rate cuts by other G10 central banks. A change in BOJ policy tomorrow is expected to be unlikely, with the likelihood of an adjustment next April increasing.

03

Goldman Sachs

【Goldman Sachs: Many central banks in the Asia Pacific region will start cutting interest rates earlier in response to the Fed's easing cycle】

Goldman Sachs Group said central banks in several countries, from India to Australia, could start cutting interest rates earlier than expected in response to a faster easing cycle by the Fed. Given that long-term US interest rates have fallen sharply, the dollar has weakened in recent weeks, and the Fed is poised to begin cutting the federal funds rate relatively early in 2024,“ Goldman economists said in a research note, adding that many Asia-Pacific central banks will be able to ease policy ”sooner than we previously thought. Many central banks in the Asia Pacific region will be able to ease policy “sooner than we had previously thought”.