Mohicans markets：MHM Today’s News

November 11, 2022--Fundamental Reminder

☆ 15:00 Germany publishes the final monthly rate of CPI for October.

☆ 15:00 U.K. publishes revised third-quarter annual rate of GDP, monthly rate of manufacturing output for September.

☆ 23:00 U.S. publishes one-year inflation estimate for November.

☆ 23:00 U.S. publishes preliminary of University of Michigan Consumer Confidence Index for November. Analysis says a synchronized move higher in the University of Michigan's 5-10 year long-term inflation expectations would indicate that the public is losing confidence, which is even tighter for the Federal Reserve.

Market Overview

Global Market Trends Review

On Thursday, November 10, after the release of U.S. inflation data, the U.S. index continued to dive below 108, closing down 2.336% at 107.87, which was the largest single-day decline in more than 10 years. Non-dollar currencies continue to pull up, the dollar plunged 4% against the yen during the day, the daily low touched the lowest since September 22, which was the largest single-day percentage drop since October 1998; the euro surged 2% against the dollar during the day; the pound surged 3% against the dollar during the day, offshore yuan soared 1200 points.

U.S. bond prices soared, with U.S. 2-year and 10-year Treasury yields falling more than 30 basis points. U.S. 10-year Treasury yields plunged nearly 8%, hitting a new 5-week low of 3.80%.

Spot gold and spot silver surged. Spot gold surged 2.86% to $1,755.72 per ounce; spot silver jumped 2.97% to $21.68 per ounce.

Crude oil turned up mid-day to end a three-game losing streak, with WTI crude closing up a modest 0.65% at $86.19 per barrel; Brent crude closed up 0.97% at $93.27 per barrel.

The slowdown in U.S. inflation pushed U.S. stocks sharply higher, with the Dow closing up 3.7%, the Nasdaq closing up 7.35% for the biggest one-day gain in March of the previous year, and the S&P 500 closing up 5.54%. The Nasdaq 100 index closed up 7.5%, the largest single-day gain since March 2020.

European stocks closed up sharply, Germany's DAX30 index closed up 3.55%, the U.K. FTSE 100 index closed up 1.19%, France's CAC 40 index closed up 1.96%, the European Stoxx 50 index closed up 3.22%, Spain's IBEX 35 index closed up 1.21%, Italy's FTSE MIB index closed up 2.56%.

Hot spots in the market

1. The US CPI data in October were lower than market expectations on a month on month basis. Biden said that the US had made progress in curbing inflation. The market reacted violently: the Nasdaq Composite Index rose 7.3%, the largest daily increase in March of the previous year, the dollar index recorded the largest daily decline in more than 10 years, the offshore yuan soared 1200 points, and the US 2/10-year bond yield fell more than 30BP.

2. The interest rate futures as of this morning showed that the market was fully priced and the Federal Reserve raised interest rates by 50BP in December, with the probability of 75BP basically returning to zero. It is expected that the Federal Reserve will reach the peak of this round of interest rate increase by 4.9% in May next year (Yesterday is 5.03% ).

3. The US Department of Finance said that some foreign exchange interventions by some countries in the near future were reasonable. The appreciation of the US dollar was mainly driven by the US economic development, and no country was designated as an exchange rate manipulator.

4. According to Punchbowl, the Democratic Party of the United States House of Representatives is scheduled to hold a leadership election on November 30.

5. Indian trade and government sources said on Thursday that the soaring price of Indian wheat may prompt the government to take some price cooling measures, such as releasing national reserves in the open market and cutting 40% of import taxes.

6. Federal Reserve official Huck: supports the suspension of interest rate increase when the interest rate reaches about 4.5%; George: The Federal Reserve may adopt a more moderate and cautious approach when tightening its policies; Federal Reserve Meister: We are happy to see the better than expected inflation report, but we are worried about the insufficient tightening; Daly: The inflation report is good news, but the Federal Reserve focuses on a series of data.

7. The market expects the Bank of England's key interest rate to peak below 4.5%. The Bank of England began selling government bonds at the end of this month.

Geopolitical situation

Conflict situation:

1. Zerenski: The Ukraine army has recovered 41 settlements in the south.

2. Ukrainian military: In the past 24 hours, Ukraine has advanced 7 kilometers in two different directions to the south and occupied 12 settlements. For the time being, Uzbekistan cannot confirm or deny the news about the withdrawal of Russian troops from Kherson. It will take at least a week for Russia to withdraw its troops from the city of Kherson. Ukraine's defense ministers do not believe that Russia will use nuclear weapons in Ukraine, but they must assess all Russian risks.

3. Adviser to the President of Ukraine: Russia hopes to turn Kherson into a “city of death”. Russia is doing its best to lay mines, including apartments and sewers, while artillery on the left bank of the Dnipro River is planning to turn the city into ruins.

4. Putin asked the government to submit a plan to guarantee special military operations within a time limit.

5. According to Interfax News Agency, the Russian side said that the army was moving to the left bank of the Dnipro River.

6. American National Security Advisor Sullivan: The Russian retreat to the far bank of the Dnieper River will be a major military development for Ukraine. Russia's withdrawal from Ukraine is not the end of the conflict, because they are still “occupying” Ukraine. The United States did not put pressure on Ukraine to negotiate the conflict.

Sanctions:

1. The United States issued a general license authorizing certain energy tradings with some Russian banks.

2. The US Department of Commerce no longer regards Russia as a market economy in the anti-dumping procedure.

Energy situation:

1. Minister of Economy of Ukraine: Russia's attack on the energy grid led to the decline of GDP.

2. The Italian Cabinet passed the fourth round of the Aid Act and took a number of measures totaling more than 9 billion euros to deal with the soaring energy prices.

Institutional perspective

1. Goldman Sachs:It is not surprising that the profit growth of (enterprises) will slow down in 2023.I think cryptocurrencies are highly speculative and investors should be cautious.

2. SOCIETE GENERALE:Short sterling against yen may be a more attractive trading strategy.

3. MUFG：A potential split in the US Congress could hit the US dollar.

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