Mohicans markets：MHM Today News

February 17, 2023 - Fundamental Reminder

☆ At 21:30, the chairman of the Richmond Federal Reserve, Balkin, delivered a speech on the US economic and monetary policy. Prior to the release of the hawk by Mestre and Bradley, the market's expectation that the Federal Reserve will raise interest rates by 50 basis points has increased. Investors need to pay attention to whether Balkin will also “release the hawk”.

☆ Today, China's refined oil will face the price adjustment window, and the industry is not expected to make any adjustment.

Market Overview

Review of Global Market Trend

On Thursday, affected by the stronger-than-unexpected PPI data, the spot gold once fell below the 1830 level, and then recovered. However, the hawkish statement of the Federal Reserve officials said that gold “added another knife”, and finally closed up 0.02% at 1836.32 US dollars/ounce; Spot silver closed 0.19% lower at $21.58/ounce.

The US dollar index stood at 104 and ended up 0.17% at 104.04; The yield of 10-year US Treasuries rose to a high of 3.863%.

In terms of crude oil, WTI crude oil rose first and then fell. WTI crude oil rose to a high of US $79.51 before the European session, then took up most of the increase and turned down, and finally closed down 0.65% at US $77.97/barrel; Brent crude oil closed down 0.67% at US $84.58/barrel.

US stocks opened low and closed low, with pressure on the hawkish comments of Fed officials at the end of the day. The Dow ended 1.26% lower, the Nasdaq 1.78% lower and the S&P 500 1.38% lower. Most sectors ended lower, with hydrogen energy, cruise and chip stocks leading the decline. Tesla closed down about 6% and Shopify closed down about 16%.

European stocks rose across the board, with Germany's DAX30 index rising 0.18% to 15533.65; The FTSE 100 Index rose 0.15% to 8010.10, a record high; The European Stoxx 50 Index closed up 0.44% at 4298.95.

Market Focus

1. Federal Reserve official's speeches - Mester: There was sufficient reason to raise interest rate by 50BP at the last meeting. If conditions permit, the pace of interest rate increase can be accelerated; Bullard: At the last meeting, we supported the interest rate increase of 50BP, and we can't rule out the possibility of supporting the interest rate increase of 50BP in March. At the end of the day, US stocks plunged under the pressure of Brad's remarks, and the three major stock indexes closed down more than 1%.

2. Saudi Arabia said that OPEC+will continue the existing agreement until the end of this year, implying that it will not make up for the gap in Russia's oil production reduction.

3. After the non-farm and inflation data exceeded expectations, the US January PPI exceeded expectations on a month-on-month basis.

4. Boosted by corporate performance, the FTSE 100 Index closed above 8000 for the first time, which was a record high.

5. As the United States tightens the regulation of cryptocurrency, Bitcoin rose above $25000 yesterday and has risen more than 50% this year.

6. Qatar is reported to be willing to buy Manchester United at a price of 5 billion pounds, and Saudi Arabia also has an intention to buy.

7. Sources: The Central Bank of Turkey requires banks to expand the price difference of gold and foreign exchange trading transactions, and requires banks to increase the transaction cost of derivatives to about 40%, so as to reduce foreign exchange demand and transfer transactions to the Istanbul Exchange.

Geopolitical Situation

Conflict Situation：

1. An air strike warning was issued throughout Ukraine.

2. The Russian Ministry of Defense announced that in the past day, Kupyansk and Zimmerman lost about 165 people to the Ukrainian forces.

3. The Ukrainian military said that Ukraine shot down 16 of Russia's 36 missiles on February 16.

Sanction Situation:

1. Sources: EU countries will take new sanctions against Russia before February 24.

2. Deputy Secretary of State of the United States Nuland: The United States and the allies of the Group of Seven will announce the new large-scale sanctions plan against Russia around February 24.

3. Russian Foreign Ministry: Russia will expel four Austrian diplomats in response.

4. According to Politico, the European Commission abandoned its nuclear sanctions plan against Russia.

Energy Situation：

1. The CEO of Ukraine Power Grid said that the worst situation of Ukraine Power Grid may have passed.

2. According to RIA Novosti, the Russian State Duma (Lower House) passed the oil tax reform plan on the third reading.

3. EU Energy Commissioner Simson tweeted that the EU has completely stopped importing Russian coal, reducing the import of Russian crude oil by 90%.

4. Minister of Energy of Saudi Arabia: OPEC+existing agreement will remain unchanged throughout the year, and production cannot be increased only according to the preliminary signal of demand.

Institutional Perspective 

01

Goldman Sachs：Goldman Sachs raised its forecast of the Fed's interest rate increase path.

Goldman Sachs said that in view of stronger economic growth and firmer inflation data, Goldman Sachs raised its expectation of the Federal Reserve's interest rate increase by another 25 basis points. At present, it expects the Federal Reserve to raise interest rates by 25 basis points in March, May and June respectively, with the terminal interest rate rising to 5.25-5.5%. In addition, Barclays and forecasting company LH Meyer also expected the Federal Reserve to raise interest rates in June (25 basis points).

02

SOCIETE GENERALE：EURUSD is bullish for a long time.

After the market interpreted the European Central Bank's interest rate decision in February as a dove, the rise of EURUSD stopped abruptly. Economists from Faxing Bank pointed out that in the long run, EURUSD still points upward. Technically, the possibility of further profit taking cannot be ruled out. The European Central Bank may try to correct the dove interpretation of the market's interest rate decision and statement in February, which may attract euro buying, but confidence may remain low until the US CPI is released next week. Due to the improvement of its own terms of trade, the boost of China's economic growth, the narrowing of the policy interest margin of the Federal Reserve/European Central Bank and the attractive valuation, the long-term trend of EURUSD is still inclined to rise. The main downside risks are the new offensive launched by Russia against Ukraine, the further deterioration of relations between Russia and the West and the interruption of energy supply in Europe.

03

MUFG

CEO of Mitsubishi UFJ: I hope the new leadership of the Bank of Japan can ensure the healthy operation of the market.