Mohicans markets：MHM Today News

☆ 09:45 China Caixin Services PMI for December

☆ 21:15 U.S. ADP Employment for December

☆ 21:30 U.S. Initial Jobless Claims for the week ending Dec. 31

☆ 23:30 EIA Natural Gas Inventories for the week ending Dec. 30

☆ 24:00 EIA Crude Oil Inventory and EIA Strategic Petroleum Reserve Inventory for the week ending Dec. 30

Market Overview

Review of Global Market Trend

The dollar index fell below the 104 mark on Wednesday night (Jan. 4), but was boosted by the hawkish Fed minutes released early this morning, narrowing its losses and regaining the 104 mark to close down 0.41 percent at 104.25.

However, the market is still slightly downgrading bets on the Fed's peak rate, so U.S. bond yields fell for two days in a row. 10-year U.S. bond yields once fell nearly 13 basis points, giving back gains since December 23, fell from near 3.75% to 3.69% during the day; more sensitive to monetary policy 2-year U.S. bond yields fell nearly 9 basis points deepest to 4.32%, once after the release of the Fed minutes turned up to 4.39% and traded near 4.35% as of the close of the U.S. stock market.

As the dollar and U.S. bonds both weakened, spot gold was boosted to extend the rally, once soaring to $1865.04 an ounce, which was the highest since June 12 last year. Trading at $1850 before the release of the Fed minutes, it closed up 0.81% at $1854.65 per ounce; spot silver rose to $24.45 before falling back to a high of 0.92% at $23.76 per ounce.

Crude oil fell sharply for the second consecutive day as disappointing PMI data released by the U.S. on Wednesday and many investors fear that the U.S. and global economies will inevitably turn to recession, further dampening oil demand, which exacerbated the decline in oil prices. WTI crude oil once fell below $73, but by the close of trading, the decline narrowed to 5.2% at $73.18 per barrel; Brent crude oil once fell to $77.71 after the release of the Fed minutes, then rebounded slightly to close 5.24% at $78.03 per barrel. Oil prices fell by more than 5% in tandem yesterday, with Brent crude oil posting its biggest one-day decline in more than three months on Wednesday. U.S. crude and Brent crude both fell more than 9% in the two trading days of the New Year, with Brent crude falling the deepest since January 1991 to start the year.

By the northern hemisphere warm weather, the market believes that the decline in heating demand, European natural gas fell for 3 consecutive days. The deepest intraday drop of more than 11% to 64 euros per megawatt hour, ICE UK gas also fell more than 11% once, forcing 150 pence per kilocalorie under the round figure.

U.S. stocks closed on Wednesday as the Federal Reserve meeting minutes showed that no policymakers expect the Fed to cut interest rates in 2023. U.S. stocks closed near their intraday highs even in late trading after diving during the session. The Dow closed up 0.4%, the Nasdaq rose 0.69% and the S&P 500 closed up 0.75%. Chinese stocks strengthened for the second consecutive day, with the Nasdaq China Golden Dragon Index closing up 8.5% and accumulating a 12.6% gain for the week. Both Xiaopeng and Alibaba rose more than 13%. Futura and Upward Rising rallied, closing up 8.9% and 12.1%, respectively.

European stocks continued the previous day's gains, Germany's DAX30 index closed up 2.16%, the FTSE 100 index closed up 0.43%, France's CAC40 index closed down 2.3%, the Euro Stoxx 50 index closed up 2.38%, Spain's IBEX35 index closed up 1.88%, Italy's FTSE MIB index closed up down 1.71%.

Hot spots in the market

1. Minutes of the December meeting of the Federal Reserve: inflation risk is still the key to the policy outlook, and we are worried about the unreasonable easing of financial conditions and the misinterpretation of policies by the market; To balance the risks of both sides of the tightening degree, no official expects to cut interest rates this year; Focus on economic data and maintain policy flexibility.

2. The California government declared a state of emergency before the storm.

3. According to a source quoted by the Financial Times, Lixun Precision will produce iPhone 14 Pro for Apple.

4. International oil prices fell for two days in a row, and the settlement prices of both oils fell by more than 5%; The NASDAQ China Golden Dragon Index rose 12.6% in two days; The daily gold price rose to a new high for 5 consecutive times.

5. The US ISM manufacturing PMI shrank for two consecutive months, recording 48.4, dropping to a new low since May 2020.

6. Kashkari of the Federal Reserve: The terminal interest rate is expected to be 5.4%, and then the interest rate increase will be suspended for a period of time. It is believed that interest rates will not be cut before inflation is falling back to 2%.

7. Ukrainian officials: Ukraine plans to launch a large-scale offensive in the spring, covering the whole line from Crimea to Donbas.

8. The sixth episode of the US House of Representatives Speaker Election Series is on. The House of Representatives will adjourn until 9:00 this morning, and McCarthy's opposition vote in the Republican Party has risen to 20.

9. WHO: XBB. 1.5 is still the most easily transmitted variant strain of Omicron virus so far, but its toxicity has not changed yet.

10. New Zealand does not require COVID-19 nucleic acid testing for Chinese tourists; Japan will strengthen the inspection requirements for Chinese tourists from January 8; The European Union recommends that Member States require passengers from China to provide COVID-19 negative certificates.

Geopolitical Situation

1. Ukrainian officials: Ukraine plans to launch a large-scale offensive in the spring, covering the whole line from Crimea to Donbass.

2. Biden: The United States may provide Ukraine with the “Bradley” infantry chariot.

3. Putin: The frigate “Grand Admiral Gorshkov” of the Russian navy, equipped with “Zircon” hypersonic missiles, began its long voyage to the Atlantic, Indian Ocean and Mediterranean.

4. The governor of Sevastopol, Russia, two UAVs were shot down by the Russian air defense system over the Black Sea near Sevastopol.

5. Ukraine said that it was “unrealistic” to establish a security zone near Zaporoge, and the military would have to seize the nuclear power plant from Russia.

6. The Russian Ministry of Defense reported that the Russian army destroyed five Ukrainian destruction and reconnaissance teams in Donetsk and Lugansk, and attacked Ukrainian military targets in many places.

7. The Ukrainian military said that it had attacked five Russian personnel and equipment assembly points and repelled Russian attacks near 10 settlements in Lugansk and Donetsk.

8. The Russian State Technology Group said that it would start mass production of a new generation of airborne and ground electronic warfare systems for fighting UAVs in the next two months.

9. French President Makron: France will provide Ukraine with AMX-10RC armored vehicles.

Agency News

1. Goldman Sachs：The UK's economic contraction in 2023 is comparable to that of Russia.

In its macroeconomic outlook for 2023, Goldman Sachs predicted that the real GDP of the United Kingdom would shrink by 1.2% in 2023, far lower than that of all other G10 major economies, only slightly higher than that of Russia, and would grow by 0.9% in 2024; Due to the continuing conflict between Russia and Ukraine and the sanctions imposed by western powers, the Russian economy will shrink by 1.3% in 2023 and grow by 1.8% in 2024.

In addition, Goldman Sachs also predicted that the U.S. economy will grow by 1% in 2023 and 1.6% in 2024. Among the major economies, Germany's economic performance is only ahead of that of Russia and the United Kingdom. It is expected to contract by 0.6% in 2023 and increase by 1.4% in 2024.

Goldman Sachs' forecast of the British economy is lower than the market consensus expectation. The market consensus expectation is that the British economy will shrink by 0.5% in 2023 and grow by 1.1% in 2024. However, the OECD also predicts that despite the same macroeconomic headwinds, the UK will lag far behind other developed countries in the next few years, and its performance will be closer to that of Russia than other G7 countries.

2. SOCIETE GENERALE：As the tightening policy of the European Central Bank becomes the focus, the euro may rise in early 2023.

Societe Generale said that the euro may rise at the beginning of 2023, because of active risk appetite, falling energy prices and the possible easing of the conflict between Russia and Ukraine, which will make the market pay more attention to the tightening of the European Central Bank's policy. Olivier Korber, foreign exchange strategist of Societe Generale, said that the forecast of the Federal Reserve showed that compared with the European Central Bank's forecast of inflation in the euro area, the rate of inflation in the United States decreased much faster. Therefore, the European Central Bank is expected to raise interest rates significantly, and its interest rate raising cycle may last longer than that of the Federal Reserve. Korber said, “Even though the seasonal factors in January showed that the euro started slowly against the dollar/USD, it is expected that the trend will accelerate as it moves towards spring.”

3. MUFG：The 10-year fixed mortgage interest rate will be raised from 3.52% to 3.7%.