Mai hui MHmarkets: June 27, 2023 - Fundamental Reminder

☆16:00 ECB President Lagarde Speech 

☆The next day at 4:30, USD API Crude Oil Stock Change (JUN/23)

Market Overview

Review of Global Market Trend

On Monday, spot gold recovered from a more than three-month low hit on Friday and stood at $1,930 in European trading. But those gains gave up in U.S. trading and still failed to hold above the 1,930 mark, ending up 0.11% at $1,923.31 per ounce. Spot silver closed up 1.56 % at $22.79 per ounce.

The dollar index traded cautiously and was intercell before settling down 0.1 % at 102.76. Treasury yields went on a “Roller coaster” day, with the two-year yield falling as low as 4.696% before recovering some ground to close at 4.744%. The yield on the 10-year Treasury note closed at 3.723%.

International crude oil rose first and then fell, WTI crude oil repeatedly tested the $70 mark during the day without success, finally closed up 0.03%, at $69.49 per barrel; Brent crude settled up 0.19% at $74.48 per barrel.

The Dow Jones Industrial Average closed down 0.04 %, the S&P 500 fell 0.45 % and the Nasdaq fell 1.16 %. Tesla, which was successively cut by Goldman Sachs and Morgan Stanley, closed down 6.06%. The Nasdaq China Golden Dragon Index edged up 0.18%.

Major European stock indexes were mixed, with Germany's DAX30 closing down 0.11 %. Britain's FTSE 100 closed down 0.11%; The Stoxx Europe 50 index closed up 0.21%.      

Market Focus

1. Wagner Affair - Putin gave a brief speech in the early morning, giving assurances to the members of the Wagner group, while thanking the Wagner group for avoiding bloodshed, without mentioning any specific individuals in the speech, Biden called the incident Russia's internal affairs, Prigozhin: The Wagner Group was destined to cease to exist on July 1, but no one agreed to sign the contract with the defence ministry and Shoigu and others held an early morning meeting with Putin.

2. Driving into New York City's CBD will be charged next year after congestion pricing was approved.

3. Russia is said to be extending its retaliation against the West's oil price cap until December 31.

4. Texas electricity demand hits record high, increasing pressure on the grid.

5. U.S. House offices use only the paid version of ChatGPT, saying it includes privacy features needed to protect data.

6. Goldman's hiring of Montag, who is seen as an ally of CEO Solomon, to the board could bolster his position at the bank at a time of growing internal discontent with Solomon.   

Geopolitical Situation

Conflict Situation

1. Ukrainian Deputy Defense Minister Mariar: the Ukrainian army has liberated about 130 square kilometers of land on the southern front since the beginning of the counter-offensive.

2. President of Ukraine Zelensky visited Donetsk region of Ukraine and met with the army.

3. Ukrainian Deputy Defense Minister: Ukrainian troops liberated the village of Rivnopil.

4. The Russian Defense Ministry issued a war report saying that Russian troops conducted a cluster strike on the Ukrainian artillery ammunition depot using sea-based long-range high-precision weapons.

5. The General Staff of the Ukrainian Armed Forces issued a battle report saying that the Ukrainian Air Force, missile units and artillery units carried out strikes against the Russian army's manpower and equipment concentration areas, command posts and artillery positions.

Assistance Situation

1. Australian Prime Minister Albanese: New military aid will be provided to Ukraine. The new aid to Ukraine is an A$110 million aid package that will provide 70 military vehicles, including armored vehicles and trucks.

2. British media: Germany expressed opposition to the EU's plan to freeze the assets of the Russian central bank for the reconstruction of Ukraine.

3. U.S. officials said the United States plans to announce a new military assistance program as early as Tuesday to provide Ukraine with up to $500 million in aid, including ground vehicles.

4. Bulgaria approved a second tranche of military aid to Ukraine.

Wagner Affair

1. Russian Wagner Group founder Prigozhin: The Wagner Group is destined to cease to exist on July 1. No one agreed to sign a (take-over) contract with the Ministry of Defense; we acted because we were treated unjustly; we did not show aggressive behavior, but we were attacked with missiles and helicopters; we want to hold accountable those who made mistakes during special military operations; our actions were not to overthrow the Russian leadership.

2. RIA Novosti reported on 26 June that a criminal case against Prigozhin, the founder of the Russian private military entity Wagner, is still pending, citing a source in the Russian Prosecutor General's Office.

3. RIA Novosti: Russia's Counter-Terrorism Committee said that the situation in the Moscow region has been stabilized so far; the mayor of Moscow said that all restrictions in the city have been lifted.

5. Biden: The outcome of the Russian incident remains to be seen. The Wagner incident is an internal Russian affair and has nothing to do with the United States.

6 NSC spokesman Kirby: unable to confirm whether Prigozhin is in Belarus; it is not U.S. policy to bring about regime change in Russia.

7 Putin made a short speech in the early morning: Wagner troops can join the Russian army or go to Belarus, and I will keep my word. Thanked Wagner side for avoiding bloodshed.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs hired Montag, seen as an ally of its CEO Solomon, to its board of directors, a move that could solidify the latter's position at Goldman Sachs at a time of growing internal discontent with Solomon.

02

SOCIETE GENERALE

【Societe Generale: PMI data affects short-term interest rate expectations, EURUSD likely to fluctuate narrowly in the long term】

On June 26, Societe Generale said that last Friday's PMI data has lost almost all confidence in the Eurozone, which desperately needs an improved economic outlook. The bank's economic team has lowered its Eurozone growth forecast to 0.9% this year, but that is still above consensus. While the team downplayed the importance of the PMI data, for now, the EURUSD continues to be closely tied to short-term interest rate expectations, and the PMI data has certainly had an impact on those expectations. EURUSD is likely to be stuck in a narrow range for a longer period of time, and selling EURCAD is recommended as opposed to selling EURUSD.

03

MUFG

【Investors bet on a stronger pound, but may ignore growth risks】

On June 26, the leveraged fund industry seems to think the Bank of England's sharp interest rate hike is good for the pound, but that may ignore the negative impact further rate hikes could have on economic growth, Mitsubishi UFJ said. The bank's analyst Derek Halpenny said in a report that Friday's international money market data showed that leveraged funds held the largest net long position in the pound since August 2022 in the week ended last Tuesday, as strong payrolls data boosted expectations of a rate hike. derek said investors should be aware of the impact of a large rate hike on the economy, because if economic data suddenly weakens The situation could shift quickly.