Mai hui MHmarkets: July 12, 2023 - Fundamental Reminder

☆ At 10 o 'clock Beijing time, the RBNZ will announce its interest rate decision, which is widely expected to be unchanged

☆ At 20:30, the US will release Inflation Rate YoY n.s.a. (JUN), Inflation Rate MoM s.a (JUN)

and Core Inflation Rate YoY n.s.a(JUN)..

☆ 20:30-2024 FOMC Voting Committee, Richmond Fed President Barkin speaks on inflation; 2023 FOMC Voting Committee, Minneapolis Fed President Kashkari participates in a panel discussion on “Bank Solvency and Monetary Policy” at 21:45.

☆ At 22, the BOC announces its interest rate decision, expected to raise rates by 25 basis points; At 23:00, the Governor and Senior Deputy Governor of the Bank of Canada hold a press conference on monetary policy.

☆24 o 'clock, a new round of domestic refined oil price adjustment window will open. Institutions are expected, this round of price adjustment is likely to increase.

☆The next day, at 2 a.m., the Fed releases its Beige Book of economic conditions.

Market Overview

Review of Global Market Trend

Spot gold rose for a third straight session on Tuesday, hitting as high as $1,938.54 an ounce before paring gains late in the session to end up 0.37% at $1,932.16 an ounce, as traders awaited U.S. inflation data for more clues on the Fed's rate hike path. Spot silver ended flat before settling up 0.05% at $23.13 an ounce.

The dollar index continued to slide, falling to its lowest level since May 11, before settling at 101.67. The yield on the 10-year Treasury note fell below the 4 percent mark to close at 3.971 percent. The RMB rebounded significantly, with the onshore and offshore RMB exchange rates rising more than 300 points against the US dollar, at one point both breaking the 7.2 mark.

WTI crude ended up 2.29% at $74.75 a barrel, the highest since May 1, as international crude rebounded strongly on the back of a weaker dollar, expectations of higher demand from developing countries and Opec + supply cuts. Brent crude settled up 1.97 percent at $79.28 a barrel.

The three major U.S. stock indexes ended higher, with the Dow Jones Industrial Average up 0.93%, the S&P 500 up 0.67% and the Nasdaq up 0.55%. The Nasdaq China Golden Dragon Index closed up 1.6 per cent, with Xpeng Motor gaining nearly 6 per cent to lead Chinese stocks. Retail stocks continued to rally, with Coinbase up nearly 10% and Riot Blockchain up 3.9% this month after gaining more than 24%.

Major European stock indexes closed higher, with Germany's DAX30 up 0.75%, Britain's FTSE 100 up 0.12% and the Euro Stoxx 50 up 0.71%.     

Market Focus

1. Minutes of the Fed's May 22-June 14 Discount Rate Meeting: The directors of the four regional Fed banks sought to raise the discount rate by 25 basis points.

2. The retail group concept index of the US stock market rose more than 10% in three days.

3. The European Union and Australia failed to reach an agreement to negotiate a free trade agreement.

4. NATO Secretary General: NATO agreed to offer Ukraine a faster path to membership.

5. The population of the EU will increase in 2022, reaching 448.4 million by 1 January 2023.

6. EIA Short-term Energy Outlook Report: Lower US crude oil production forecast for this year in anticipation of higher demand.

7. Iraqi Prime Minister: Iraq will swap crude oil for Iranian gas to overcome US restrictions on payments to Iran.

8. Foreign media: ByteDance will allow U.S. employees to cash out their shares without waiting for the company to go public, a move that may signal that the company is in no rush to go public.

9. Us Court rejects FTC injunction, allowing Microsoft to proceed with acquisition of Activision Blizzard; Microsoft's legal battle with British regulators has also been suspended, and it is understood that the company will make a small divestments to appease British concerns.

Geopolitical Situation

Conflict Situation

1. Interfax: Russian Defense Minister Shoigu said that overall, Ukraine did not achieve the goal of the counter-offensive.

2. RIA Novosti: Russian Defense Minister Shoigu said that the Russian army launched a counteroffensive in the direction of Honliman and made progress.

3. TASS: Russian Defense Minister Shoigu said that if Ukraine uses U.S. cluster munitions in the U.S., the Russian army will be forced to adopt a similar approach.

4. Russian media quoted emergency services as saying that the city of Tokmak in Zaporozhye oblast was attacked with cluster munitions. Ukraine and others have not yet responded to this.

Assistance Situation

1. NATO Secretary General Stoltenberg: allies need to provide Ukraine with more ammunition.

2. White house press secretary Pierre: it is clear that support for security assistance to Ukraine has bipartisan support.

3. Germany announced a new arms aid package for Ukraine worth 700 million euros. Germany's package includes 25 main battle tanks and 2 patriot missile launchers.

4. French President Emmanuel Macron said he decided to deliver new missiles to Ukraine, which will be for a longer range to enable it to defend itself. French military sources say France has begun delivering a “large number” of long-range Scalp cruise missiles to Ukraine.

5. NATO Secretary General Jens Stoltenberg: NATO agreed to provide Ukraine with a faster path to membership. Agreement on a multi-year assistance program for Ukraine.

6. Britain announces new aid to Ukraine, including a £50 million equipment maintenance support program.

MHMarkets

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: cuts December U.S. core PCE estimate to 3.5%.

July 12 -- Goldman Sachs: lowered its December 2023 U.S. core PCE estimate to 3.5% from 3.7% previously. This is partly due to seasonality in autos, housing and residuals. But as the labor market gradually return to balance, core PCE inflation will also be “more durable”.

02

SOCIETE GENERALE

Societe Generale: Headline inflation in the US is expected to fall by another 0.8 pct annualized rate in June. However, core inflation is likely to fall by only 0.3 percentage points on an annualized basis and remain elevated. Indeed, a slowdown in headline inflation could add to the demand pressures on core inflation, which would only increase the Fed's propensity to continue tightening policy. 

03

MUFG

MUFG: Non-farm payrolls data won't make Fed more hawkish in the second half of the year.