Mai hui MHmarkets: July 25, 2023 - Fundamental Reminder

☆21:00 USD FHFA House Price Index MoM (MAY)&USD S&P/CS Composite-20 HPI YoY (MAY)

☆21:00 IMF World Economic Outlook for July 2023

☆22:00 USD CB Consumer Confidence (JUL)&USD Richmond Fed Manufacturing Index (JUL)

☆ The following day at 04:30 USD API Crude Oil Stock Change (JUL /21)

Market Overview

Review of Global Market Trend

On Monday's mixed US economic data, with the manufacturing PMI showing strength and the services PMI falling to hit a five-month low along with the composite PMI, as well as lingering concerns about sticky inflation, the dollar index continued to rise, closing up 0.31% at 101.4.

Treasury yields staged a V-shaped rally, with the short end rising even more, with the two-year yield rising 7 basis points at one point to a two-week high, rising from 4.85% to 4.92% during the day. The yield on the 10-year Treasury note rose to 3.87% from 3.84%, erasing all its decline since July 13.

Spot gold, hampered by a rebound in the dollar index and U.S. Treasury yields, lost the 1,960 mark, falling for four consecutive sessions and erecting all gains over the past week to settle down 0.37% at $1,954.71 an ounce. Spot silver fell for three straight sessions to end down 1.11% at $24.34 an ounce.

Crude oil has been buoyed by concerns about tight supply prospects and optimism about demand stemming from China's stimulus policy, with both U.S. and Brazilian oil prices hitting three-month highs. WTI crude briefly broke above $79 and closed up 2.75% at $78.88 a barrel; Brent crude rose as high as $83 before closing up 2.53% at $82.62 a barrel.

U.S. stocks fluctuated slightly throughout the day, with the Dow up 0.52%, the Nasdaq up 0.19 % and the S&P 500 up 0.42%. Most popular Chinese stocks were in the red, with the Nasdaq China Golden Dragon Index up more than 4.2%, Alibaba up more than 4.5%, and NIO, Xpeng and Bilibili all closing up more than 10%. Tesla outperformed the broader market, closing up 3.5%.

European shares were mixed, with Germany's DAX30 closing up 0.08%, Britain's FTSE 100 up 0.21% and Europe's Stoxx 50 down 0.20%.   

Market Focus

1. Israel's parliament passed a controversial judicial reform bill.

2. The OpenAl co-founder's “Worldcoin” soared on its first day of trading.

3. Russia is considering limiting the number of companies that export petroleum products to combat illegal exports.

4. Indices related to Chinese stocks jumped more than 4% overnight, with Hang Seng index futures trading above 500 points.

5. Argentina and the IMF reached a preliminary agreement on issuing a new round of debt refinancing loans.

6. Apple is opening applications for its Vision Pro headset to developers, who must sign a non-disclosure agreement.

7. People familiar with the matter: Apple is asking suppliers to ship about 85 million new iphones in 2023.

8. Tesla executives are expected to meet India's commerce minister this month to discuss plans to build a factory in India to produce a new car priced at $24,000.

Geopolitical Situation

Conflict Situation

1. Crimea: Russian air defenses intercepted 11 drones and Crimean ammunition depots were hit, Crimean sources said.

2. Southern Ukrainian Military Command: Russian night attack in Odessa destroys grain depot, injures four people.

3. Two Ukrainian-launched drones intercepted and destroyed, according to RIA Novosti, citing Russian Defense Ministry.

4. Mayor of Moscow, Russia: drone attack on two non-residential buildings in Moscow. The drone attack did not cause any casualties or significant damage.

5. Russian Defense Ministry: Russia thwarted 17 Ukrainian drone strikes in Crimea.

6. Market News: Russian drone attack on Ukrainian port of Riony river.  

7. The Kremlin says that all drones launched at Moscow on Monday were shot down, that such attacks have increased in recent days, and that measures are being taken.

8. Deputy Chairman of the Security Council of the Russian Federation Dmitry Medvedev: Russia needs to expand its range of targets in Ukraine.

9. The Russian Defense Ministry issued a war report stating that the Russian forces repelled the Ukrainian offensive in various directions, including Donetsk, Hongriman, Kupyansk, Zaporozhye, Kherson, and intercepted Hymas rockets and drones launched by the Ukrainian forces.

10 The General Staff of the Ukrainian Armed Forces stated that the Ukrainian forces conducted several rounds of shelling and air strikes on the positions of Russian personnel and equipment.

11. The Ukrainian Defense Minister stated that the Ukrainian counteroffensive, although behind schedule, is proceeding as planned.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: Raises Microsoft's (MSFT. O) target price from $350 to $400.

02

SOCIETE GENERALE

Societe Generale: BOJ's view that no action is needed for now shows their commitment to avoiding deflation.

03

MUFG

MUFG: USDJPY recovered understandably.

July 19 -- BOJ Governor Kazuo Ueda's latest speech sparked a fresh rally in the dollar against the yen to some extent. MUFG economists said that Kazuo Ueda acknowledged that market function has improved, but that the decision to adjust the YCC will be based more on fundamentals than on market function at this critical juncture. The market's reaction to Kazuo Ueda's comments suggests that speculation of a YCC adjustment next week has diminished. However, we believe that the BoJ's economic expectations to be released next week will provide a rationale for adjusting the YCC. And when yields are not under upward pressure and have not yet threatened the upper limit of the 0.5% range, it is instead an ideal time to adjust the YCC. Friday's Japanese CPI data will remain key, which could once again trigger another round of speculative pricing in the market. However, the USDJPY has understandably regained some lost ground against the backdrop of improving risk appetite and soft-landing optimism.