Mohicans markets：MHM Today News

☆ Pending U.S. Treasury Secretary Yellen attended the hearing

☆ 08:30 Australia's quarterly adjusted unemployment rate in February

☆ 09:30 Monthly report of residential prices in 70 large and medium-sized cities in China

☆ At 14:00, Baidu held a press conference with the theme of ERNIE Bot

☆ 19:00 The UK Office of Budget Responsibility gives a briefing on the UK budget

☆ 20:30 Canada's monthly wholesale sales rate in January, the number of initial jobless claims in the week from the United States to March 11, the annual total number of new housing starts in the United States in February, the total number of construction permits in the United States in February, the manufacturing index of the Federal Reserve of Philadelphia in the United States in March, and the monthly rate of the import price index in the United States in February

☆ 21:15 The European Central Bank announced the interest rate resolution and the President of the European Central Bank Lagarde held a press conference

☆ 22:30 EIA natural gas inventory of the week from the United States to March 10

Market Overview

Last night, US inflation unexpectedly showed signs of cooling down. The PPI data unexpectedly fell 0.1% month-on-month, and the year-on-year growth slowed from 5.7% to 4.6%. The “terrorist data” also dropped sharply. However, due to the market's fear that Credit Suisse would trigger the European banking crisis, the safe-haven market flooded into the US dollar, and the US dollar index once broke the 105 mark in the intraday, closing up 1.01% at 104.77.

Affected by the demand for risk aversion, the yield of US Treasuries fell, and the yield of two-year US Treasuries fell by 69 basis points to 3.72% at one time in the day. As of the closing of US equities, the trading volume was around 3.9%. The yield of 10-year US Treasuries fell by 32 basis points during the day, from 3.69% to 3.45%.

At the same time, the spot gold was boosted by the demand for safe-haven and the sharp decline in the yield of US Treasuries. At one time, it rose more than US $33 to US $1937.28/ounce, ending up 0.78% at US $1918.73/ounce. Spot silver once regained the US $22 mark in the intraday, closing up 0.45% at US $21.78/ounce.

Although the IEA monthly report raised China's oil demand, crude oil was suppressed by the risk aversion sentiment and lost blood for three consecutive days. WTI crude oil fell below $66, the largest intraday drop in six months, closing down 4.53% at $68.21/barrel; Brent crude oil once fell below $72/barrel, closing down 4% at $74.39/barrel. The cumulative decline of the two oil companies this week was more than 10%, and both fell to a new low in more than one year.

The three major indexes of the US stock market split, with the Dow down 0.87%, the Nasdaq up 0.05% and the S&P 500 down 0.69%. Energy, materials and financial sectors influenced the market greatly. Credit Suisse ended down 14.1% for five consecutive trading days, with a total market value of about US $8.5 billion.

European stocks ended sharply lower, with Germany's DAX30 index down 3.25%, the FTSE 100 index in the UK down 3.81%, France's CAC40 index down 3.58%, the European Stoxx 50 index down 3.41%, Spain's IBEX 35 index down 4.31%, and Italy's FTSE MIB index down 4.60%. In addition, Credit Suisse closed down about 24%.

Market Focus

1. Nick Timiraos, the Fed's “shadow official”, wrote an article suggesting that the Fed would suspend rate hikes due to the recent banking turmoil.

2. Credit Suisse received verbal solidarity from Swiss authorities on liquidity, U.S. stocks closed down to 14%, the Swiss franc plunged 2%.

3. The disturbance of Silicon Valley Bank：

① U.S. banks received more than $15 billion in deposits in a short period of time.

② U.S. authorities relaunched the program to sell SVB.

③ S&P: downgraded First Republic Bank to junk status and placed it on negative watch list.

④ Goldman Sachs may have made a profit of more than $100 million in the Silicon Valley Bank (SVB) debt deal last week.

⑤ The KBW Bank Index of U.S. stocks closed down 3.65% overnight, with First Republic Bank closing down 20% and Credit Suisse closing down 14%.

4. IEA Monthly Report: Oil market surplus as Russia extracts more crude.

5. Federal Reserve: FedNow instant payment service will be launched in July.

6. Credit Suisse's dollar bonds due 2026 plunged to the level of distressed debt.

7. British authorities do not expect the British economy to fall into recession this year.

8. U.S. media: U.S. senators hope to force the Biden administration to reevaluate its relationship with Saudi Arabia.

9. The Wall Street Journal cited people familiar with the matter: G7 opposed to lowering the $60 per barrel price ceiling for Russian oil.

10. Japan increased its holdings of U.S. debt by $28 billion in January, and China reduced its holdings for the fifth consecutive month.

Geopolitical Situation

Energy Situation：

1. Wall Street Journal citing people familiar with the matter: G7 opposed to lowering the $60/bbl price cap on Russian oil.

2. IEA monthly report: Russia's oil export revenue fell $2.7 billion to $11.6 billion in February, which was close to half of the level before the Russia-Ukraine conflict.

3. Russian Energy Minister: Gasoline and diesel prices are expected to fluctuate within the inflation range in 2023; Russia's coal production reaches the level before the COVID-19 pandemic in 2022 and is expected to remain at that level in 2023.

4. Russian Ministry of Finance: revenues from windfall profits tax are expected in the fourth quarter of 2023; the windfall profits tax will not include companies with pre-tax profits below 1 billion rubles, but banks will not be exempted.

Assistance Situation：

1. The EU is finalizing a 2 billion euro deal to join forces to supply Ukraine with weapons and replenish the European arsenal. 

2. U.S. Defense Secretary Austin: Nine Western countries have pledged to supply Ukraine with more than 150 German-made Leopard tanks in total.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs lowers U.S. economic growth forecast.

On March 16, Goldman Sachs cut its 2023 U.S. economic growth forecast by 0.3 percentage points to 1.2%. The banking turmoil will force small and medium-sized banks to tighten lending standards to maintain sufficient liquidity, which will put a drag on overall demand conditions and thus reduce economic growth.

02

SOCIETE GENERALE

【Societe Generale: ECB Unlikely to Make Surprise Policy Next Week】

On March 10, Societe Generale interest rate strategists wrote in a report that the ECB is not expected to make many market surprises in terms of monetary policy decisions, and the market's reaction is expected to depend on the hawkishness of Lagarde's press conference. In line with general market expectations, Societe Generale expects the ECB to raise interest rates by 50 basis points next week, bringing the deposit rate to 3.00%.

03

MUFG

【Mitsubishi UFJ Financial Group: British budget or improve the performance of the pound】

On March 15, Mitsubishi UFJ Financial Group said the British government's upcoming spring budget may not have a substantial impact on the pound at first, but it may be beneficial to the pound in the long run. Analyst Derek Halpenny said in a report that the budget is likely to focus mainly on expanding British economic growth, including capital subsidies to encourage business investment. The budget announcement is (in the short term) unlikely to move markets (barring positive growth-related surprises), but the persistent high level of uncertainty and pessimism associated with the U.K. in recent years has receded, suggesting that the pound could certainly perform better in the future.