May 18, 2023 - Fundamental Reminder

☆ 17:15, BoE Governor John Bailey will be questioned by the UK Treasury Committee on monetary policy.

☆ 20:30, USD Unemployment Claims (MAY/13)

The market currently expects it to increase by 254,000.

☆ 21:05, Fed Governor Jefferson will speak on the economic outlook. At present, he has been nominated by Biden as the vice chairman of the Federal Reserve, investors can pay attention to his views on the Fed's subsequent monetary policy.

☆ 21:30, Federal Reserve Governor Barr in the Senate Banking Committee to make a testimony statement. Earlier he had said that the commercial real estate vacancy rate pushed up the risk and took full responsibility for the Federal Reserve's regulatory failures during his tenure.

☆ 22:00, the 2023 FOMC voting member and Dallas Fed President Logan will speak. She had said on Tuesday that less tightening does not mean less commitment to inflation targeting.

Market Overview

Review of Global Market Trend

On Wednesday, due to Biden's commitment to the debt ceiling, stronger-than-expected U.S. economic data and hawkish comments from some Fed officials, the dollar index was once up to the 103 mark, approaching a seven-week high, and finally closed up 0.24% at 102.85. The onshore and offshore yuan against the dollar both fell below the “7” mark during the day, and the dollar hit a two-week high against the yen intraday.

U.S. bond yields continued to rise, two-year U.S. bond yields stood above 4.1%, eventually closing at 4.160%; 10-year U.S. bond yields rose to 3.589% intraday highs, eventually closing at 3.572%.

Influenced by the strong U.S. dollar, spot gold continued to sink, breaking below the 1980 mark once during the day and falling to an intraday low of $1,975.07; and then recovered some of its lost ground, finally closing down 0.37% at $1,981.74 per ounce. Spot silver fell and then rose, eventually closing down 0.02% at $23.74 per ounce.

In terms of crude oil, perhaps because of the expectation that the U.S. will soon reach the debt ceiling boosted risk sentiment, the two oils ignored a bearish EIA report and both rose more than 2%. WTI crude oil rose more than 3% during the day and rose to an intraday high of $72.39, eventually closing up 2.98% at $72.61 per barrel; Brent crude oil rose to near $76, eventually closing up 2.75% at $76.71 per barrel.

All three major U.S. stock indexes closed higher, with the Nasdaq closing up 1.28%, the Dow closing up 1.24% and the S&P 500 up 1.19%. Regional bank stocks maintained high volatility, KBW Bank Index rose 5%, Alains Bank of the West and Westpac Consolidated Bank closed up 10.2% and 21.6%, respectively. Tesla, which is rumored to be hoping to build a factory in India, closed up 4.4%. The Nasdaq China Golden Dragon Index closed slightly lower by 0.26%, dragged by Ideal Auto and Shell.

European stocks were mixed, Germany's DAX30 index closed up 0.34%; Britain's FTSE 100 index closed down 0.36%; Europe's Stoxx 50 index closed down 0.09%.

Market Focus

1. Russian Deputy Prime Minister Novak: Russia and Iran consider the possibility of trade settlement in yuan.

2. Debt ceiling-McCarthy said a deal by Sunday is feasible, Harris to hold briefing on debt ceiling early Friday, Biden to hold press conference on Sunday, White House expects to reach a deal next week.

3. The CDS Board ruled that Credit Suisse's full write-down of AT1 bonds does not constitute a condition for triggering a CDS payout.

4. Faced with political crisis and internal unrest, Ecuador's president announced to dissolve the parliament and prepare for general election.

5. IFA: Emerging market debt exceeds $100 trillion, a record high.

6. The Nikkei 225 closed above 30,000 points for the first time since September of the previous year.

7. Black Sea grain export agreement extended by two months to July 18.

8. The SEC is reportedly considering new intraday margin call authority for clearing agencies.

Geopolitical Situation

Sanction Situation：

1. Ministry of Foreign Affairs of Finland: The bank account of the Finnish Embassy in Russia has been frozen. Russia has been asked to provide an official explanation, but no response has been received yet.

2. U.S. Senate Committee passed the bill on Russian uranium import ban.

3. U.S. National Security Advisor: The U.S. will propose a package of sanctions in the G-7 statement. G-7 leaders are expected to engage with Zelensky during the meeting.

Energy Situation：

1. Russian Finance Minister: Russian oil and gas revenues are behind schedule this year. Non-oil and gas revenues are expected to be slightly in surplus by the end of 2023.

2. Putin: Our actions to reduce oil production are intended to support the price environment. Russian Deputy Prime Minister: Russia has reached its target of reducing production by 500,000 barrels per day in May.

3. Iranian media: Iran's oil minister said the Russian side agreed to invest in six oil fields in Iran.

4. Russian Deputy Prime Minister: The reciprocal supply of oil products between Iran and Russia may reach 4-5 million tons per year. Iran is interested in importing oil products from Russia. The two countries continue discussions on cooperation in six Iranian oil fields, considering the construction of an electronic gas platform, as well as the use of the yuan for mutual payments.

Institutional Perspective

01

Goldman Sachs

In the first quarter of this year, including Bridgewater, BlackRock, Goldman Sachs, Tiger Global and other foreign management giants in the sea on a number of technology stocks to increase their positions significantly.

02

SOCIETE GENERALE

The feeling of overvaluation of the US dollar will not be easily shaken off

On May 12th, Kit Juckes, Chief Global Foreign Exchange Strategist at Societe Generale, said that the intraday trend of the US dollar was acceptable, but its valuation was not. The rebound in the yen is only a matter of waiting for the Bank of Japan to take action. The current global economic or geopolitical conditions are insufficient to justify the US dollar holding onto most of its gains from 2021 to 2022. On a daily basis, positions, yield trends, geopolitical uncertainties, and economic data trends all indicate that the US dollar may remain within a narrow range for a period of time. However, the feeling that the US dollar is overvalued is not easy to get rid of. The rebound in the yen is just a matter of waiting for the Bank of Japan to take action, and this feeling is also the same.

03

MUFG

【Mitsubishi UFJ: Economic weakness outside the U.S. may provide short-term support for the dollar】

On May 17th, the dollar rose to a five-week high against a basket of currencies on concerns about an economic slowdown outside the U.S., which put heavy pressure on Asian and Latin American currencies, said Lee Hardman, an analyst at Mitsubishi UFJ. He said, “The softening growth outlook outside the U.S. is helping to provide more support for the dollar in the near term.” Meanwhile, improved U.S. retail sales, industrial output and NAHB housing market data released on Tuesday helped ease fears of a further slowdown or recession in the U.S. economy.