Mohicans markets：MHM Today News

☆ U.S. stocks will be closed for one day on January 16 (Monday) due to Martin Luther King Day, and trading in CME's precious metals and U.S. crude oil futures contracts ends early at 03:30 on the 17th.

☆ 09:30 China releases monthly report on residential sales prices in 70 large and medium-sized cities.

☆ 23:00 Bank of England Governor Bailey and Deputy Governor Woods make testimony statements.

Market Overview

Review of Global Market Trend

Last week's CPI and other data released reinforced expectations of a further slowdown in rate hikes to 25 basis points at the Fed's next meeting, with the University of Michigan's consumer inflation expectations released last Friday (Jan. 13) retreating further. The U.S. dollar index, on the other hand, sank further to a low since June 2022, rebounding after falling below the 102 mark to close down a slight 0.06%, barely closing above 102 at 102.18. The offshore yuan hit a six-month high, rising more than 1,000 points for the week.

The 2-year U.S. bond yield recovered more than 10 basis points intraday from last Thursday's three-month trough to reach a high of 4.24%, but still fell cumulatively last week. The benchmark 10-year U.S. bond yield turned up intraday and closed slightly lower at 3.498%.

Thanks to a weaker dollar driven by the Federal Reserve slowing down interest rate hikes, spot gold surpassed $1,920 per ounce for the first time since April 25 last year, closing up 1.24% at $1,920.32 per ounce. Spot silver broke through the $24 barrier, closing up 2.1% at $24.27 per ounce.

Crude oil rose more than 8% in a week to hit the biggest gain in three months, mainly benefiting from China's adjustment of anti-epidemic measures to make the market bullish on the outlook for oil demand. Oil prices have been climbing since the European session on Friday, with WTI crude closing up 2.28% at $80 per barrel and Brent crude breaching $85 per barrel, closing up 1.87% at $85.36 per barrel. European benchmark natural gas futures closed at 64.81 euros per megawatt-hour, down 3%, while U.K. gas fell 2.9%. European natural gas prices fell for a fifth straight week, which was the longest streak of declines since last June. Traders believe current inventory levels and LNG imports are adequate and are dismissive of the impending cold snap.

U.S. stocks opened lower, lower at the beginning of the session due to the earnings reports of Wall Street banking giants to release signals of economic deterioration or expected recession; but turned higher during the session due to the unexpected acceleration of consumer inflation expectations and eventually the three major stock indexes collectively closed higher, the Nasdaq closed up 0.71%, closing at a high since December 14, 2022; the S&P 500 closed up 0.38%, closing at a high since December 13, 2022. The Dow closed up 0.33%. Last week, the S&P 500 rose 2.7%, the Dow rose 2%, and the Nasdaq rose 4.8%, which was the largest single-week gain since Nov. 11, 2022. 2023 so far, the S&P 500 rose 4.2%, the Dow rose 3.5%, and the Nasdaq rose 5.9%.

European stocks closed up collectively, Germany's DAX30 index closed up 0.19%, the FTSE 100 index closed up 0.68%, France's CAC40 index closed up 0.69%, the European Stoxx 50 index closed up 0.57%, Spain's IBEX35 index closed up 0.58%, Italy's FTSE MIB index closed up 0.18%.

Spot Hot in the Market

1. The Prime Minister of Australia said that he would seek to fully restore trade relations with China.

2. The airline of the crashed passenger plane in Nepal issued a bulletin to adjust the number of victims to 68. The plane crashed without Chinese citizens.

3. More than 80000 people in Israel protested against Netanyahu's government, after the government proposed reforms to enable the parliament to overturn the ruling of the Supreme Court.

Geopolitical Situation

1. The Russian Ministry of Defense said that the Russian military launched a missile attack on the Ukrainian military command and control system and related energy facilities on the 14th, hitting all the established targets.

2. 29 people have been killed in the attack on the apartment building in Dnipro, Ukraine.

3. Putin: The process of the special military action against Uzbekistan is positive and everything is progressing as planned.

4. According to the Russian satellite news, the Ukrainian power grid has encountered a major problem of insufficient power generation, and the national energy consumption level, including Kiev, has dropped significantly.

5. Former German diplomat: Germany produces ammunition for only one day in half a year, and advocates and calls on European military enterprises to produce more weapons and ammunition.

6. German armament manufacturer: Before 2024, it is impossible to provide “leopard” tanks to Ukraine, because the maintenance, repair and transportation of tanks will take nearly a year.

7. It is reported that the UK intends to provide Ukraine with four AH-64 “Apache” attack helicopters and “Jail Fire” air-to-ground missiles.

8. It is reported that leaders of other NATO member countries may send attack helicopters to Ukraine.

9. Putin: Russia's economic situation is stable and far better than predicted. The inflation rate in the first quarter of this year may be close to 5%.

10. Iranian parliamentarians said that Iran would receive Russian warplanes in March.

11. Russia and Belarus will hold a joint air tactical exercise from January 16 to February 1.

Institutional Perspective

01

Goldman Sachs

Even under the mild economic contraction, the S&P 500 index will rebound by up to 12% in 2023. The index fell 19% last year, and Goldman Sachs believes that it has largely priced the risk of growth stagnation.

02

SOCIETE GENERALE

High interest rates may support the euro throughout the year.

Kit Juckes, chief global foreign exchange strategist of Faxing Bank, believes that unless there is new progress in the geopolitical situation, we should buy the euro on a bargain basis. If the Russian-Uzbekistan conflict had not affected inflation and economic growth, public finance and terms of trade in Europe, the euro should now show a clear upward trend against the dollar, approaching the level of 1.20. Of course, the direct impact of the conflict on the economy and the negative impact of the exposure of the European energy crisis on confidence are very important. However, if the impact of the conflict does not intensify or disappear completely, our interest rate forecast proves that the euro/dollar will have a four-digit increase this year, which is consistent with our forecast that the euro/dollar will rise to 1.12 at the end of the year.

03

MUFG

US CPI data needs to rise unexpectedly to support the US dollar and change market expectations.

Economists from Mitsubishi UFJ said that the US CPI data tonight is expected to further confirm that the inflation pressure is continuing to ease. It is expected that the monthly rate of overall inflation will fall by 0.1% and the monthly rate of core inflation will record a moderate growth of 0.3%. Before the release of the US CPI data, the market was inclined to believe that the Federal Reserve would further slow the pace of interest rate increase to 25 basis points at the next meeting, and the terminal interest rate would remain below 5%. Only if there is a sharp upward surprise in today's data can we materially change these expectations and prevent the dollar from further downward revision.