Mohicans markets：MHM Today News

07:50 Bank of Japan releases summary of monetary policy meeting reviewers' views

09:15 China One-Year Loan Prime Rate to March 20

15:00 Germany February monthly rate of PPI

18:00 Eurozone seasonally adjusted Trade Account for January

22:00 ECB President Lagarde delivers a speech

Market Overview

Review of Global Market Trend

On Friday, market concerns about the banking crisis dragging down the economy made a comeback, coupled with the University of Michigan's consumer inflation expectations for the coming year plunging to 3.8%, the dollar index continued to dive, once falling to 103.68, closing down 0.53% at 103.85.

U.S. bond yields fell again, with the 2-year U.S. bond yield falling to 3.8% at one point after the release of the University of Michigan's consumer inflation expectations, down nearly 36 basis points during the day. As of the close of the U.S. stock market, trading near 3.85%, last week's cumulative decline of about 75 basis points. 10-year U.S. bond yields fell more than 20 basis points intra-day, last week's cumulative decline of about 27 basis points, and 2-year U.S. bond yields have fallen for 2 consecutive weeks.

Spot gold continued to benefit from the market's safe-haven demand, jumping nearly $70 on Friday to close up 3.59% at $1988.3 per ounce, which was a new high of more than 1 year. Last week's cumulative gain of more than 6%, which was the largest weekly gain since March 2020; spot silver returned to the $ 22 mark, closing up 4.2% at $ 22.59 per ounce. Last week's cumulative gain of 9.56% was the largest weekly gain since August 2020.

Crude oil is still under the pressure of the recession, WTI crude oil once forced down the 65 mark, closing down 2.92% at $66.22 per barrel; Brent crude oil once fell to $71.39 per barrel, closing down 2.79% at $72.51 per barrel. Last week, WTI crude oil fell 13.34% and Brent crude oil fell 12.77%, which was the largest weekly decline since April 2020.

European natural gas gave back last Thursday's gains, with continental TTF benchmark Dutch gas futures closing down 3.35% at 42.857 euros per megawatt-hour on Friday, refreshing the low set on Wednesday since March 8, after a cumulative drop of 18.92% last week.

U.S. stocks sank across the board, with the Dow closing down 1.2%, the Nasdaq closing down 0.74% and the S&P 500 closing down 1.1%. Regional banks closed sharply lower, with First Republic Bank closing down nearly 33% and accumulating a decline of over 70% last week. Last week, the S&P 500 accumulated a gain of 1.43%, the Dow fell 0.16% and the Nasdaq rose 4.41%.

European stocks closed lower across the board, with Germany's DAX30 index closing down 1.33%, the FTSE 100 index closing down 1.00%, France's CAC40 index closing down 1.43%, the Euro Stoxx 50 index closing down 1.18%, Spain's IBEX35 index closing down 1.91%, and Italy's FTSE MIB index closing down 1.60%.

Market Focus

1. The Federal Reserve and five developed country central banks announced to increase the frequency of dollar swap operations to enhance liquidity.

2. Under the mediation of the Swiss government, UBS acquired Credit Suisse at a discount of 40% for a consideration of 3 billion Swiss francs, and assumed a loss of 5.4 billion US dollars; Creditors holding $17 billion worth of Credit Suisse AT1 bonds will lose everything.

3. The Swiss central bank provided liquidity of 100 billion Swiss francs to the merged Credit Suisse, which was welcomed by the US Treasury and the Federal Reserve, and emphasized the strong liquidity and resilience of the US banking industry.

4. US officials say that US bank deposits have stabilized, and capital outflows have slowed or stopped, or even reversed.

5. The Federal Deposit Insurance Corporation of the United States allegedly seeks to split the Silicon Valley bank into two parts for sale.

6. Medium sized banks in the United States require that federal deposit insurance be extended to all deposits.

7. Iran has agreed to hold talks at the foreign minister level with Saudi Arabia.

8. Putin visited the southern Ukrainian city of Mariupol and spoke with local citizens.

Geopolitical Situation

Conflict situations:

1.According to the General Staff of the Ukrainian Armed Forces, the Ukrainian army destroyed 21 Russian tanks, 23 armored vehicles, and killed 710 Russian soldiers in the past day.

2.According to the Russian Ministry of Defense, the Ukrainian army conducted two attempts to conduct combat reconnaissance and transport combat readiness in the direction of Kupiansk, but both were thwarted by the Russian army.

3.Founder of Wagner Group: It is planned to recruit 30,000 new soldiers by the middle of May.

4.Putin visited the southern Ukrainian city of Mariupol and spoke with local citizens. He previously visited Crimea.

5. Former Prime Minister Nikolai Azarov of Ukraine believes that Kiev is preparing to strengthen mobilization.

Institutional Perspective 

01 

Goldman Sachs

Former CEO of Goldman Sachs: The Federal Reserve can stop raising interest rates after the banking crisis 

On March 20th, Lloyd Blankfein, a former CEO of Goldman Sachs, said that the Federal Reserve could suspend interest rate hikes this week because the evolving banking crisis would effectively tighten lending standards in the economy. The tightening of loans will lead to a slowdown in economic growth, thereby meeting the Federal Reserve's goal of slowing the economy to curb price inflation. Since the outbreak of the crisis, the credit market has been volatile, costs have soared, and corporate borrowers are no longer issuing new debt. Blankfein also warned that without intervention to protect the deposits of small and regional banks, consumers may only rely on large banks, which may lead to the consolidation of the financial industry, which is detrimental to the development of the United States' large and growing economy. However, Blankfein believes that the current banking crisis is still different from the global financial crisis triggered in 2008.

02

SOCIETE GENERALE

[Societe Generale Bank of France: The impact of the ECB's interest rate hike on the interest rate differentials of euro zone countries is becoming smaller and smaller]

On March 17th, the interest rate strategist of Societe Generale wrote in a report that the impact of the ECB's interest rate hike on the interest rate differentials of euro zone countries is becoming smaller and smaller, and the focus has shifted back to economic fundamentals. Investors are watching for signs of a debt crisis, although the risk of a rapid sovereign debt crisis is unlikely. Nevertheless, Italy's debt level is still at an all-time high, especially Italy, which is trying to avoid the risk of a steady narrowing of the Italian German treasury bond yield spread. According to Tradeweb data, the spread between the 10-year Italian treasury bond and German treasury bond is about 189 basis points.

03

MUFG

[Mitsubishi UFJ: If the Federal Reserve continues to raise interest rates, the US dollar will continue to weaken]

On March 17th, basically, the Federal Reserve's balance sheet expanded by nearly $300 billion in a week, which may mean that the Federal Reserve may continue to raise interest rates before next week's meeting, if conditions permit. The market expects a probability of a 25 basis point interest rate hike next week to be approximately 80%. We believe that at point, this expectation is reasonable. If there are no further bank stress events, the possibility of a 25 basis point rate hike by the Federal Reserve will increase before next week's meeting. In this situation, we expect the dollar to continue to weaken, as in our view, this may be the last time the Federal Reserve will weaken.