Mohicans markets：MHM Today News

February 6, 2023 - Fundamental Reminder

☆ 17:30 Eurozone February Sentix Investor Confidence 

☆ 18:00 Eurozone monthly rate of Retail Sales for December

☆ 23:00 U.S. January GSCPI

Market Overview

Review of Global Market Trend

The non-farm payrolls data released on Friday night was stronger than expected, with the U.S. unemployment rate falling instead of increasing to a new low of more than 50 years and year-over-year payroll growth slowing less than expected. The employment data is currently one of the Fed's most concerned indicators, and the upsetting non-farm payrolls data could weaken the Fed's anti-inflation efforts. After the release of the non-farm payrolls data, the Fed swap deal lowered bets on a Fed rate cut in 2023, with the Fed policy rate expected to peak at 5% in June. The dollar index surged more than 100 points in response, closing up 1.18% at 102.99, which was a new 3-week high.

U.S. bond yield soared sharply after the non-agricultural period. 10-year U.S. bond yields rose by more than 10 basis points within the day, from 3.39% to 3.51%, almost erasing the decline of the previous three days, and rose by about 2 basis points last week; 2-year U.S. bond yields rose more than 20 basis points in the day, hitting a new high since January 12; As of the closing of the US stock market, the trading volume was around 4.29%, and the cumulative increase of more than 10 basis points last week, and 10-year U.S. bond yields rose for two weeks after three consecutive weeks of decline.

Spot gold dived through the $1,900 mark in response to the non-farm payrolls announcement, falling about $50 in total; it was down 2.46% at $1,865.69 per ounce by the close of trading, which was the biggest drop since June 13, 2022. Last week's cumulative decline of 3.29%, giving back all the gains of the previous three weeks. Spot silver fell below the $23 mark after the non-farm payrolls, closing down 4.77% at $22.35 per ounce.

Crude oil oscillated and turned up several times during the session, but it was depressed by the strong rise in the dollar and the closing of positions over the weekend, and oil prices suffered heavy losses. The price of WTI crude oil closed down 3.64% at $73.1 per barrel, while the price of Brent crude oil closed down 3.1% at $79.67 per barrel. Last week, WTI crude oil fell 8.68% and Brent oil fell 8.67%, dropping two weeks in a row after two consecutive weeks of gains and erasing the previous 2 weeks of gains. European natural gas rebounded from last Thursday's retreat, the continental TTF benchmark Dutch natural gas futures closed up 1.49%, which was the third day of gains, the full week failed to erase all the losses from last week's cumulative sharp drop.

U.S. stocks closed down collectively on Friday, with the Dow closing down 0.38%, the S&P 500 closing down 1.05% and the Nasdaq Composite closing down 1.59%. As of the close, the Nasdaq index rose 14.7% in five weeks since the beginning of this year, which was the best performance in the same period of the opening five weeks of 1975. The S&P 500 closed lower across all major sectors, with most leading technology stocks closing lower and popular Chinese concept stocks continuing to retreat overall.

European stocks mostly rose, Germany's DAX30 index closed down 0.2%, Britain's FTSE 100 index closed up 1.06% to a record high, France's CAC 40 index closed up 0.94%, the European Stoxx 50 index closed up 0.41%, Spain's IBEX 35 index closed up 0.03%, Italy's FTSE MIB index closed down 0.51%. In addition, the Euro Stoxx 600 index entered a technical bull market.

Market Focus

1. Japanese media: Akira Yumiya, deputy governor of the Bank of Japan, may take over the post of governor. The finance minister of Japan said that he had not heard of the matter, and the Japanese yen which fell sharply today returned to half of its value.

2. Part of the reform plan of the retirement system in France is adjusted to win the support of more parliamentarians.

3. After nearly three years, Japan will resume accepting cruise ships visiting Japan in March.

4. For the second time in two months, the Central Bank of Syria significantly adjusted the exchange rate of Syrian pounds to the United States dollar, from 4522 Syrian pounds to 6800 Syrian pounds to the United States dollar.

Geopolitical Situation

Conflict Situation:

1. According to the Russian satellite network, the scouts of the western Russian military region occupied the Ukrainian positions guarded by Polish mercenaries.

2. British military intelligence agency: Russia continues to make small progress in the siege of the town of Dunbas Bachmut.

3. The Russian “Wagner” group said that fierce fighting was taking place in the north of Bakhmut, Ukraine.

4. The Ukrainian media quoted the General Staff of the Ukrainian Armed Forces as saying that on February 4, the Ukrainian Armed Forces killed 700 Russian soldiers and destroyed two Russian tanks and two air defense systems.

5. Ukraine: The Russian army is expected to launch an attack in February. At that time, not all western weapons will arrive in Ukraine, but Ukraine has reserves to prevent Russia from advancing.

6. The head of the Ukrainian President said that the Ukrainian Defense Minister Leznikov had been transferred to other ministerial positions, and Kyrylo Budanov would serve as the new defense minister of Ukraine.

Food Situation:

1. A Romanian barge carrying 860 tons of wheat sank in the port of Lenny Port Odessa, Ukraine.

2. Foreign vector: H5N1 virus has made a comeback in Europe, and mammalian infection has doubled.

3. According to the data of the Ministry of Infrastructure of Ukraine, in January this year, 77 ships exported 3 million tons of agricultural products from the ports in Odessa to African, Asian and European countries, a decrease of 25% compared with December last year.

Energy Situation:

1. American media: The amount of fuel purchased by New York from India has reached a new high in recent years. The fuel is likely to be made from the banned Russian oil.

2. Turkey has reached the final stage of establishing a natural gas center, with the goal of achieving the first transaction within one year.

3. Birol, Director of the International Energy Agency, said that the oil price ceiling not only achieved the goal of stabilizing the oil market, but also reduced Russia's oil revenue. From January 2022 to January 2023, Russia's oil and gas export revenue fell by nearly 30%.

4. Russian Lavrov visited Iraq to discuss bilateral relations and energy cooperation.

5. Goldman Sachs said that Russian oil exports fell because of sanctions and the recovery of demand, the oil price will rise from about $80/barrel to more than $100/barrel.

Assistance Situation:

1. Minister of Defense of Canada: The first planned delivery of Leopard 2 tanks has been delivered to Ukraine. The Ukrainian side said that Ukraine would start training the “leopard” tank crew from February 6.

2. German Prime Minister Schultz said that he reached a consensus with Zelensky that the weapons provided by the West would not be used to attack Russian territory.

3. Ukrainian Armed Forces Air Force: Ukrainian forces are being trained to master the SAM/T air defense system to be provided by France and Italy.

4. Wall Street Journal: Russia and Iran will promote the UAV plan, and the joint UAV factory will be located in Russia, which can produce at least 6000 Iranian-designed UAVs for the Ukrainian conflict.

5. Ukraine said that Israel had promised to transfer relevant missile and UAV early warning technology to Ukraine.

Institutional Perspective

01

Goldman Sachs

The oil price will rise to more than $100/barrel this year

Goldman Sachs Group said that the oil price will rise to more than $100/barrel this year. With the depletion of idle capacity, it may face serious supply problems in 2024. Goldman Sachs said that because the sanctions may lead to a decline in Russian oil exports, and it is expected that China's demand will recover, the oil price will rise from about $80/barrel to more than $100/barrel. Kerry, the head of the commodity research department of the bank, said that the lack of production expenditure needed to meet demand in the oil industry would also be a driving factor for the rise of oil prices. By 2024, the lack of capacity may become a major problem.

02

SOCIETE GENERALE

The European Central Bank is expected to raise interest rates by 50 basis points again

It is expected that the European Central Bank will raise interest rates by 50 basis points again, and by 25 basis points in March. By July, the terminal interest rate will reach 3.75%. At that time, the risk may become more symmetrical. The bank also expects that the QT of the asset purchase plan will be slightly accelerated by the end of this year, while the reinvestment of the comprehensive emergency anti-epidemic debt purchase plan (PEPP) will be completed by the middle of 2024. The European Central Bank promised that this meeting will provide detailed parameters of QT, which may include the specific tightening amount of a single plan, as well as guidance on how flexible the European Central Bank can be. It is expected that there will be no major deviation in the capital element or term structure, except for some discretionary adjustments to the average capital flow over a period of time.

03

MUFG

It is expected that the Bank of England will raise interest rates by 50 basis points. Given that the outlook for UK interest rates will become more and more dovish later this year, if the Bank of England releases a cautious outlook, the pound may fall. (Jinshi Data APP)