MHMarkets ：MHM Today News

☆ At 20:30, the US will release CPI data for April. The market currently expects its year-on-year growth rate to be 5%, which is consistent with last month. The growth rate of core CPI slows down from last month to 5.5%, but the chain growth rate of CPI is expected to accelerate, rising to 0.4% from 0.1% in the previous month.

☆ At 22:30, the U.S. will release EIA crude oil inventories for the week ending May 5. The market currently expects it to decrease by 1.6 million barrels.

Review of Global Market Trend

On Tuesday, as investors sought a safe-haven amid economic uncertainty and awaited the release of U.S. CPI data. Spot gold stood at the 2030 mark during the U.S. session and rose to an intraday high of $2037.70, eventually closing up 0.67% at $2034.52 per ounce. Spot silver hovered around $25.50 and eventually closed up 0.19% at $25.60 per ounce.

The dollar index oscillated upward and rose to an intraday high of 101.85 in the U.S. session, eventually closing up 0.24% at 101.63. U.S. bond yields fell before rising, with the 2-year U.S. bond yield remaining above 4%, closing at 4.026%. The 10-year U.S. bond yield also remained above 3.5%, closing at 3.522%.

Crude oil first fell and then rose, WTI crude oil once fell to an intraday low of $71.29 per barrel; but then due to many good, WTI crude oil rebounded strongly and recovered all intraday losses, finally closing up 1% at $77.49 per barrel; Brent crude oil closed up 0.88% at $77.23 per barrel.

The U.S. Dow closed down 0.17%, the Nasdaq closed down 0.63%, and the S&P 500 closed down 0.46%. The Nasdaq China Golden Dragon Index closed down 2.22%, and popular Chinese stocks generally closed lower, with New Oriental closing down about 6% and Xiaopeng Auto and Netease closing down about 4%.

European stocks mostly closed lower, Germany's DAX30 index closed up 0.02%; Britain's FTSE 100 index closed down 0.18%; Europe's Stoxx 50 index closed down 0.59%.     

Market Focus

1. Debt ceiling negotiations-Biden and McCarthy are at odds with each other, and negotiations lasting about an hour have made no progress; the two sides are scheduled to meet again on the 12th and may continue to meet on Tuesday night and Wednesday local time; McCarthy denied a reprieve to extend the debt ceiling to Sept. 30.

2. Blackstone CEO reportedly postponed his plan to provide financial assistance to potential GOP 2024 presidential candidate DeSantis after meeting with the latter.

3. U.S. House Speaker McCarthy: Need to reach a debt ceiling deal in principle by next week; rejects short-term debt ceiling deal that extends to Sept. 30.

4. Fed official speeches-Williams: no reason to cut rates this year, it can raise rates again if needed. See signs of further credit tightening, which may affect the Fed's future prospects for rate hikes; Jefferson: inflation will begin to fall, the economy will have the opportunity to continue to expand.

5. Syria decided to resume its mission in Saudi Arabia, and Saudi Arabia has made the same decision.

6. U.S. small business confidence index for April fell to the lowest in more than 10 years, but there is no difficulty in obtaining credit.

7. ECB Executive Committee member Schnabel: rate cuts are highly unlikely in the foreseeable future, with a 25BP pace available to reach restrictive rates.

8. Three consecutive morning news of crude oil : the U.S. Energy Secretary said he plans to fill oil war reserves by the end of the year. It is reported that Russia's April production cut is close to the committed target of 443,000 barrels per day; EIA expects U.S. crude oil production to grow 5.1% this year to 12.53 million barrels per day.

Geopolitical Situation

Sanction Situation：

1. Ukrainian President Zelensky: An eleventh set of sanctions against Russia is expected to be introduced soon.

2. According to The Times: Britain is expected to blacklist Russia's Wagner Group.

3. Japanese Vice Finance Minister Shinto Kanda: We are in the final stage of providing more aid to Ukraine.

Food Situation：

1. According to RIA Novosti: Russian officials said that a high-level quadripartite meeting on the food agreement will be held in Istanbul on May 10-11.

2. Market news: Ukraine, EU to open coordination platform for agricultural exports.

3. For its part, the UN said that inspections of ships leaving the port resumed on Tuesday in accordance with Ukraine's Black Sea grain agreement.

MHMarkets

Institutional Perspective

01

Goldman Sachs

If LNG demand in Europe and elsewhere rebounds in the second half of 2023, its average price during the winter would have to exceed €90 per MWh the following year to achieve storage purposes.

02

SOCIETE GENERALE

Societe Generale: BoE expected to raise interest rates by 25bp and the pound is expected to be boosted

On May 8 -- Societe Generale economists expect a hawkish 25-bp rate hike from the Bank of England this week, which is expected to provide support for the pound and counter the bearish seasonal trend. After the release of higher-than-expected payrolls and inflation data last month, some members cannot be ruled out from calling for another 50 bps rate hike, thus facing a three-way split. We forecast the BoE to raise rates by 25 bps to 4.50% and assess against some members' call for a 4.5% terminal rate.

03

MUFG

Mitsubishi UFJ: BoE unlikely to disrupt current positive pound performance

The pound remains the best performing G10 currency in 2023 and was by far the best performer in the second quarter. Economists at Mitsubishi UFJ expect that the BoE meeting will not put pressure on the pound. The U.K. economy continues to show resilience, and improving terms of trade from energy prices is a key positive development for the pound. Bank of England chief economist Peel has already spoken of a “positive demand shock”. We do not expect the BoE to disrupt the current positive performance of the pound. The euro may break lower against the pound.