MHMarkets：December 13, 2023,--Fundamental Reminder

TBD OPEC Monthly Crude Oil Market Report

15:00 GBP GDP MoM (3M) (OCT)

18:00 EUR Industrial Production MoM (OCT)

21:30 USD PPI YoY (NOV) & USD PPI MoM (NOV)

23:30 USD EIA Crude Oil Stocks Change (DEC/08) & USD EIA Cushing Crude Oil Stocks Change (DEC/08) & USD EIA Strategic Petroleum Reserves Change (DEC/08)

The next day at 03:00 USD Fed Interest Rate Decision & FOMC Economic Projections

The next day at 03:30 USD Fed Press Conference

Market Overview

Review of Global Market Trend

On Tuesday, the U.S. CPI growth rate in November unexpectedly accelerated to hit the market's expectations of interest rate cuts, U.S. bond yields pulled up briefly during the session, medium- and long-term U.S. bond yields in the 30-year U.S. bond tender results were announced to turn back to the decline in the 10-year U.S. bond yields to close at 4.202%; on the Fed's policy rate is more sensitive to the yield of two-year U.S. debt to close at 4.735%. The U.S. dollar index set a new daily high after the CPI data was released, but then retraced its gains to end down 0.259% at 103.82.

Spot gold rose and then fell, once lost the 1980 mark, and finally closed slightly down 0.02% at $1,980.96 per ounce, still hovering at three-week lows; spot silver closed down 0.1% at $22.77 per ounce.

Spot gold rose and then fell, once lost the 1980 mark, and finally closed slightly down 0.02% at $1,980.96 per ounce, still hovering at three-week lows; spot silver closed down 0.1% at $22.77 per ounce.

Expectations of the Fed to cut interest rates early frustrated to some extent means that the risk of a hard landing of the economy is greater, resulting in the early attempts to rebound international crude oil lost momentum, hitting a five-month low. WTI crude oil intraday losses once expanded to 4%, and ultimately closed down 3.74% at $68.8 per barrel; Brent crude oil closed down 3.53% at $73.58 per barrel.

The three major U.S. stock indexes slowly advanced, the Dow closed up 0.48%, the Nasdaq rose 0.7%, the S&P 500 index rose 0.46%, for the fourth consecutive trading day to close higher and hit a new closing high since January 2022. ORCL.N closed down 12% in its first post-performance session, while AMD.O, NVDA.O both rose more than 2%. Nasdaq China Golden Dragon Index closed up 0.44%, EDU.N rose nearly 5%, NIO.N fell 5.2%, and BABA.N rose slightly.

Major European stock indexes closed collectively lower. Europe's Stoxx 50 closed down 0.08%, Germany's DAX 30 closed down 0.02%, and Britain's FTSE 100 closed down 0.03%.

Market Focus

1. The U.S. November unquartered CPI annual growth slowed to 3.1% year-on-year, as expected, and accelerated unexpectedly to 0.1% year-on-year growth; core CPI growth was 4% year-on-year, unchanged from October, and accelerated to 0.3% year-on-year growth, both in line with expectations. Traders now expect the Fed's first rate cut will take place in May 2024.

2. Yellen commented on the CPI data, said rising real interest rates may affect the Fed's decision-making on the path of interest rates.

3. EIA short-term energy outlook report: expected 2023 Brent price of $ 82.40 per barrel, previously expected to be $83.99 per barrel. Brent price is expected to be $82.57 per barrel in 2024, previously expected to be $93.24 per barrel. The WTI crude oil price is expected to be $77.63 per barrel in 2023, compared to the previously expected $79.41 per barrel. WTI crude oil price in 2024 is expected to be $78.07 per barrel, previously expected to be $89.24 per barrel.

4. Israel began “water attack” Gaza tunnels, seawater injection process may last several weeks. The tenth emergency special session of the United Nations General Assembly was convened and a resolution was overwhelmingly adopted, calling for an immediate ceasefire between the two sides in the Israeli-Palestinian conflict.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs; Lower inflation will prompt the Fed to start cutting interest rates in the third quarter of next year】

Goldman Sachs chief economist Jan Hatzius is now predicting that falling inflation will prompt the Federal Reserve to start cutting interest rates in the third quarter of next year, earlier than he previously expected.Hatzius expects a rate cut of nearly a full percentage point next year, but says Fed officials will cut rates twice next year and 125 basis points in 2025.

02

Wells Fargo

【Wells Fargo: Market is too optimistic about the Fed's interest rate cut. US stocks may fall in the first half of next year】

As the Fed is about to announce its latest interest rate resolution, Wells Fargo strategists warned that the stock market is betting a bit too much on the end of Fed tightening. “Tomorrow, we expect Fed Chairman Jerome Powell to continue to emphasize 'keeping rates higher for longer' and try to convince the market that there will be no easing of policy in the near term,” Chris Harvey, head of equity strategy at Wells Fargo's securities unit ( Chris Harvey) said in a telephone interview with the media on Wednesday. “However, we doubt market participants will change their minds about the timing of the upcoming rate cut.”

03

CICC

CICC research report pointed out that the U.S. November CPI 3.1% year-on-year, and core CPI 4.0% year-on-year, both in line with market expectations. From the sub-item, the continued decline in energy prices is an important factor in the fall in inflation, but the resilience of service inflation still exists, showing that the battle against inflation is still not over. This inflation data supports the Fed to continue to pause rate hikes, but does not support a rate cut anytime soon, we expect the Fed to stay put this Thursday, the dot plot or maintain the forecast of two rate cuts next year, which is much more conservative than the market forecast of five rate cuts. Powell or refute the market for rate cuts for the aggressive expectations, but investors may not all agree, which means that the market and the Fed or will continue to play until the economic data to prove or disprove the need to keep interest rates high.