MHMarkets ：MHM Today News

☆ At 9:20, 150 billion yuan of 1-year medium-term lending facility (MLF) and 18 billion yuan of 7-day reverse repo expire.

☆ At 20:30, U.S. April New York Fed manufacturing index is released; At 22:00, the U.S. April NAHB housing market index is released. Although the market expects the Fed to raise interest rates in May is almost certain, if there are more weak surprises in economic data, it may re-pressure the rate hike expectations.

☆ At 23:00, ECB President Lagarde speaks, watch out for her latest views on monetary policy. Earlier sources revealed that officials are converging on a consensus on a 25 bps rate hike in May, though controversy continues. Also, more ECB policymaking officials are rumored to be calling for an end to bond principal reinvestment.

☆ To be determined, domestic oil products open a new round of price adjustment window. The current round of refined oil prices may pick up significantly due to changes in international oil prices. After the increase, the average of 92 gasoline may rise to 7.90 yuan per liter, which will refresh the year's largest rate of increase.

Market Overview

Review of Global Market Trend

On Friday, due to the release of retail sales data after the surge in market bets on the Fed's May rate hike, coupled with the Fed governor put hawk and consumers' recent inflation expectations unexpectedly strong recovery, spot gold from more than a year high plunged more than 50 U.S. dollars, but the end of the small rebound above the 2,000 mark, finally closed down 1.74% at $2004.26 per ounce; spot silver also plunged on the US market high, and finally closed down 1.72% at $25.36 per ounce.

The dollar index broke away from its nearly one-year low and closed up 0.554% at 101.59; the U.S. 10-year Treasury yield pulled up with the expected rise in interest rate hikes, standing at the 3.5% mark and closing at 3.515%.

International crude oil oscillated narrowly, with weekly gains for four weeks in a row. WTI crude hovered in a range of less than $2, eventually closing up 0.52% at $82.65 per barrel; Brent crude closed up 0.22% at $86.69 per barrel.

The U.S. Dow closed down 0.42%, the Nasdaq closed down 0.35% and the S&P 500 closed down 0.21%. Bank stocks generally closed higher, JPMorgan Chase closed up more than 7%, Citigroup closed up nearly 5%, Bank of America rose more than 3%.

European stocks closed up collectively, Germany's DAX30 index closed up 0.5%, the FTSE 100 index closed up 0.36%, France's CAC40 index closed up 0.52%, the European Stoxx 50 index closed up 0.63%.

Market Focus

1. The Sudan Rapid Support Force claims to have occupied the naval tower at the headquarters of the armed forces, and the death toll on the second day of the conflict was at least 56. The League of Arab States convenes an emergency meeting; The presidents of the three East African countries will go to Sudan to mediate the conflict.

2. G7: Achieve net zero emissions of the energy system by 2050 at the latest. Agree on a $4 billion key mineral action plan (lower than the planned $7.5 billion).

3. More “explosives” were found in the backpack of the suspect who attacked Kishida Wenxiong, and bomb disposal experts suggest that they may be homemade iron tube bombs. The support rate of the Japanese cabinet has increased by 10%.

4. British media: The Bank of England is considering urgent reforms to its deposit protection plan or increasing the amount of corporate guarantees. 

Geopolitical Situation

1. The Ukrainian army fired 20 rockets into the center of Donetsk using multi barrel rocket artillery.

2. The Russian Ministry of Defense said that the Russian army destroyed more than 30 Ukrainian troops in the direction of Kherson and destroyed three cars and one “pink” howitzer.

3. Foreign media: Within two weeks of joining NATO, Finland has built a fence along the Finnish Russian border.

4. The Russian Pacific Fleet is conducting a surprise readiness inspection mission, with support from the Russian Air Force.

5. Director of the Office of the Ukrainian President Yermak stated that 130 previously detained Ukrainian soldiers, border guards, and members of the National Guard have returned to Ukraine.

6. The largest nuclear power unit in Europe, the 3rd reactor of the Olkiluoto Island Nuclear Power Plant in Finland, has officially been put into daily operation.

7. European Commission Vice President and “Foreign Minister” Borrelli: More and faster support is needed for Ukraine.

8. G7 Joint Communique: Ready to support Ukraine in achieving sustainable and resilient recovery and green reconstruction.  

Institutional Perspective 

01

Goldman Sachs

Goldman Sachs and UBS warn that falling inflation is not enough to drive the stock market up.

On April 14th, inflation is steadily decreasing. According to the US CPI and PPI reports released this week, last month's data was lower than consensus expectations. A few months ago, this news may have driven the stock market soaring. But the S&P 500 index did not really respond to this. Strategists at UBS and Goldman Sachs have issued warnings that they both believe there will not be much room for the stock market to rise in the foreseeable future. Our view is that the pricing of stock risk is not reasonable enough to make bulls more attractive, said Alexandra Wilson Elizondo, co head of Goldman Sachs portfolio management. Many strategists declined to recommend stocks before the Federal Reserve suspended or cut interest rates. UBS strategists also expect the Federal Reserve to raise interest rates again in May, and although the economy is losing momentum, they do not expect a rate cut in 2023. UBS Chief Investment Officer Mark Haefele pointed out that slowing growth and high interest rates are a bad combination for the stock market. Jason Draho, head of asset allocation at UBS Americas, believes that currently betting on the stock market seems unreliable because the P/E ratio of the S&P 500 index is relatively expensive compared to history, at around 18.5 times.

02 

SOCIETE GENERALE

Societe Generale: The US dollar may have peaked against the Canadian dollar, similar to the US interest rate.

On April 12th, Societe Generale stated that no one expected the policy interest rates of the Bank of Canada to change tonight. However, futures traders have established their largest Canadian dollar short position since January 2019. The USD/CAD tracks the relative interest rates between the US and Canada, but so far, the biggest driving force behind this price difference is the trend in US interest rates. We believe that the US dollar has peaked against the Canadian dollar and will decline to 1.25 in the coming months, even though the sticky core CPI data and lackluster policy statements from the Canadian central bank may not have a significant driving effect on the currency pair.

03

MUFG

We believe that recent developments will support the Canadian dollar, so we have added new short positions against the US dollar, with a target level of 1.2950 and a stop loss level of 1.3650.