MHMarkets ：MHM Today News

April 26, 2023 - Fundamental Reminder

☆ 09:30 Australia's first quarter CPI annual rate, Australia's March unadjusted CPI annual rate

☆ 14:00 Gfk Consumer Confidence Index of Germany in May

☆ 16:00 ZEW investor confidence index of Switzerland in April

☆ 18:00 UK April CBI retail sales difference

☆ 20:30 Monthly rate of durable goods orders in the United States in March

☆ 22:30 EIA crude oil inventory for the week from the United States to April 21, and EIA strategic oil reserve inventory for the week from the United States to April 21

Review of Global Market Trend

Just one week away from the next Fed interest rate meeting, the market is surprised again. The US banking crisis has reignited, and the US economic data is mixed. The Federal Reserve's interest rate swaps are no longer fully priced, and the Federal Reserve will raise interest rates by mid year. However, as a safe haven currency, the US dollar briefly pushed up to the 102 level, closing 0.61% higher at 101.86.

The yield on US Treasuries has significantly declined, with the two-year yield dropping by the deepest 24 basis points, falling below the 4% mark. As of the close of the US stock market, trading was around 3.92%. The 10-year US Treasury yield fell by more than 13 basis points, dropping from 3.48% to 3.4% within the day, and both the two-year US Treasury yield closed at a new low in the past two weeks.

Spot gold was also boosted by safe haven demand, breaking the $2000 mark to $2003.9 per ounce in the session, surging nearly $30 from the intraday low. However, the late day gain narrowed, closing 0.4% higher at $1997.04 per ounce. Spot silver briefly fell to $24.5 per ounce in the US market, barely reaching the $25 mark as of the close, closing 0.59% lower at $25.02 per ounce.

Crude oil has regained its decline due to multiple factors such as imminent interest rate hikes by European and American central banks, economic weakness, and the strengthening of the US dollar. WTI crude oil prices fell from a daily high of 79.01 US dollars per barrel to 76.46 US dollars per barrel at one point, narrowly regaining the 77 US dollar level in the late trading session, closing 1.98% lower at 77.08 US dollars per barrel; Brent crude oil narrowly missed the $80 mark during trading, closing 2.25% lower at $80.58 per barrel.

The US stock market was dragged down by a series of negative news, with the Dow closing down 1.01%, the Nasdaq closing down 1.98%, and the S&P 500 index closing down 1.58%. The performance of First Republic Bank plummeted by 49.2%, and its stock price hit a historic low during the trading session.

Most European stocks closed lower, with the German DAX30 index rising 0.03%; The FTSE 100 Index in the UK closed down 0.29%; The French CAC40 index closed 0.56% lower; The European Stoxx 50 Index closed 0.56% lower; The IBEX35 index in Spain closed 1.28% lower; The Italian FTSE MIB index closed 1.01% lower.        

Market Focus 

1. President Joe Biden formally announced his candidacy for re-election as President of the United States.

2. Banking crisis fears reignited market pricing of Fed rate hikes, with bond markets pricing a 21BP Fed rate hike by mid-year instead of at least one standard hike previously.

3. The EU will begin phasing in a carbon border tax starting in 2026, with full implementation starting in 2034.

4. The Fed's assessment of the Silicon Valley Bank incident will be released on April 28th at 11pm GMT.

5. Sudanese Rapid Support Forces said they have taken control of most of the buildings of the SAF General Command.

6. Moody's said Italy is the only country it tracks that is at risk of having its sovereign debt rating downgraded to junk status.

7. First Republic Bank shares are at a 50 percent discount, with market value falling to an all-time low of $1.5 billion. The bank is considering divesting $50-100 billion in assets, and potential buyers include several large U.S. banks, people familiar with the matter said.

8. The White House said Biden would veto McCarthy's debt ceiling plan. U.S. five-year credit default swaps rose to 65 basis points, the highest level in 13 years.

9. Several major central banks, in consultation with the Federal Reserve, decided to restore the frequency of operations of the dollar liquidity swap agreement from daily to weekly.

Geopolitical Situation

Conflict Situation

1. Russian Foreign Ministry officials said Russia may lift its decision to suspend the deployment of intermediate-range and short-range missiles.

2. Russia's Defense Ministry said Russian forces eliminated 645 Ukrainian troops during a special military operation in Ukraine over the past 24 hours.

Assistance Situation

1. Vice-President of the European Commission and “Foreign Minister” Borrelli: There are still some differences regarding the EU's plans to provide Ukraine with more ammunition.

2. Ministry of Finance of Ukraine: the latest aid funding support will bring the total direct EU budget support to Ukraine to 6 billion euros in 2023.

3. The Ministry of Finance of Ukraine said that Ukraine received 1.5 billion euros of aid from the EU.

Energy Situation

1. Russia's Energy Ministry said that the spread between Russian oil and Brent crude is narrowing.

2. Uzbekistan has reached an agreement with Gazprom to import 300,000 tons of oil in 2023.

3. Russian Deputy Energy Minister: We are working on a new energy strategy and hope to share some results with you in the coming months.

Food Situation

1. Russian Defense Minister: Ukraine's drone attacks threaten grain deal.

2. Hungarian Agriculture Minister: Wants to maintain import restrictions on Ukrainian grains until the end of 2023.

3. Russian Foreign Minister Sergei Lavrov said that the issue of the food agreement is not resolved and the West has caused the situation to stalemate. And until now, no one has considered the issue of restoring ammonia supplies.

4. The EU opened consultations on the issue of Ukrainian food imports, and after almost 12 hours of consultations, the meeting did not result in a resolution.

Institutional Perspective 

01

Goldman Sachs

Tighter credit conditions are expected to reduce U.S. GDP growth by 0.4 percentage points in 2023, Goldman Sachs analyst Jan Hatzius said in a recent report.

02

SOCIETE GENERALE

【Societe Generale: U.S. tax revenue drop in April will bring forward debt deadline】

April 21, Societe Generale Subadra Rajappa and other strategists said in a report that the U.S. Treasury is more likely to run out of its borrowing capacity sometime in June if tax revenues for the rest of April are around 50% of 2022 levels. Societe Generale still expects the U.S. Treasury to run out of its borrowing capacity between late July and early August, but the forecast will face uncertainty if tax revenues are much lower than currently expected. Societe Generale said the forecast is based on assumptions about tax revenues for the remainder of April and the size of borrowing available under the extraordinary measures.

03

MUFG

The Bank of Japan is expected to keep monetary policy unchanged amid tight credit in the U.S. and European banking sectors.