Mai hui MHmarkets: August 3, 2023 - Fundamental Reminder

☆ 09:45 CNY Caixin Services PMI (JUL)

The market is expecting it to record 52.4.

☆ There are more PMI data releases in Europe today.

15:50 EUR France Services PMI Final (JUL)

16:00 EUR Services PMI Final (JUL)

16:30 GBP Services PMI (JUL)

☆16:00 EUR PPI Data (JUN)

☆ 19:00 GBP BOE Interest Rate Decision (AUG/03)

The market expects it to raise interest rates by 25 basis points, bringing them to 5.25%.

19:30 BOE Governor Bailey Press Conference

☆ 19:30 USD Challenger Job Cuts (JUL)

☆ 20:30 USD Initial Jobless Claims (JUL/29)

The market expects it to record 227,000, which is up from the previous 221,000.

☆ 21:45 USD Markit Services PMI Final (JUL)

☆ 22:00 USD ISM Non-Manufacturing PMI (JUL) & USD Factory Orders MoM (JUN)

Market Overview

Review of Global Market Trend

Because of the “ADP” data again strong, Wednesday, spot gold before the U.S. market fell sharply, lost the 1940 mark in the plate, and once fell to $1932.97 intraday lows, down more than $20 compared to the daily highs, and ultimately closed down 0.49% at $1934.76 per ounce; spot silver fell to the $24 mark and finally closed down 2.39% at $23.71 per ounce.

The dollar index rose strongly, and once rose to a daily high of 102.79, a three-week high, and finally closed up 0.62% at 102.59. U.S. bond yields rose and then fell, the two-year U.S. bond yields rose to an intraday high of 4.939% during the session, and finally closed at 4.885%; 10-year U.S. bond yields once rose to a daily high of 4.126%, and finally closed at 4.090%.

Crude oil plunged 3% at one point, despite a record drop in U.S. crude inventories. WTI crude eased off after rising to a daily high of $82.17, and losses accelerated in the U.S. session and lost the $80 mark, eventually closing down 2.97% at $79.69 per barrel, while Brent crude finally closed down 2.67% at $83.34 per barrel.

The three major U.S. stock indexes opened lower, with the Dow closing down 0.98%, the S&P 500 down 1.38% and the Nasdaq down 2.17%. The Nasdaq China Golden Dragon closed down 4.2%, with Alibaba down% and Pinduoduo down nearly 7%. Google, Microsoft and Amazon all fell more than 2%. The U.S. Superconductor pulled back sharply, closing down more than 29%.

Major European stock indexes closed lower across the board, with Germany's DAX 30 closing down 1.36%, Britain's FTSE 100 closing down 1.36% and Europe's Stoxx 50 closing down 1.61%.   

Market Focus

1. Putin will visit Turkey, but no date has been set.

2. Bank of America became the first major Wall Street bank to stop expecting the U.S. to fall into recession.

3. AMD is considering following Nvidia's lead and offering a special version of its AI chips to Chinese customers.

4. Brazil's central bank exceeded expectations to cut interest rates by 50BP, and is expected to continue to cut rates by the same amount next.

5. U.S. media: the U.S. Department of Justice is considering filing fraud charges against Coin, but is concerned that the move may trigger a run.

6. OPEC+ source: Friday's JMMC meeting is unlikely to adjust production policy, but surprises cannot be ruled out.

7. The Kansas Fed named banking expert Jeffery R. Schmid as president, to take up his post before the annual meeting in Jackson Hole.

8. U.S. stocks fell on the first day of Fitch's downgrade of the U.S. sovereign rating, with the Nasdaq dropping more than 2%; crude oil defied a record inventory drop to fall more than 3% at one point.

9. 2023 Fortune 500: Walmart reigns at the top, Saudi Aramco rises to No. 2 for the first time, and State Grid stays at No. 3.

10. Data-US ADP employment for July recorded a much higher than expected 324,000; US crude inventories fell by a record 17 million barrels last week; US Treasury raises refinancing auctions by a total of $7 billion to $103 billion.

Geopolitical Situation

Conflict Situation

1. Head of Izmel Port, Ukraine: The port is currently in normal operation.

2. Russian armed forces seized eight Ukrainian positions in a three-day offensive, according to the RIA Novosti news agency.

3. Russian Defense Ministry: Ukrainian Navy drones tried to attack Russian warships in the Black Sea. Russian warships are escorting civilian transport ships.

4. Ukrainian Defense Ministry: A grain silo was damaged in a previous Russian attack on the Ukrainian port of Izmel on the Danube River. Another lift in the port of Izmel in the Odessa region was damaged by Russians.

5. According to Romanian TV, the Ukrainian port of Izmel has been hit by a Russian drone. Industry sources: Russian drone strikes have severely damaged the Ukrainian port of Izmel. Sources: The Ukrainian port of Izmel on the Danube suspended operations.

6. UK Ministry of Defence: Russia may have started forming large new units in the past two months to strengthen the depth of its ground forces. That includes the 25th Joint Army. Russia may deploy new backup forces in Ukraine. In the long run, however, Russia wants to strengthen its hand in the face of NATO. Without a massive new wave of forced mobilisation, Russia is unlikely to find enough new troops to form a new army.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：The Fitch downgrade won't have an immediate impact on U.S. financial markets】

The reasons Fitch downgraded the U.S. sovereign credit rating from the highest level contained no new fiscal information and largely reflected governance and medium-term challenges, Goldman strategists led by Jan Hatzius wrote in a note. “The downgrade should have no direct impact on financial markets as major holders of Treasuries are unlikely to be forced to sell in response to a downgrade. Because Treasurys are such an important asset class, most investment mandates and regulatory regimes specifically refer to Treasurys, rather than AAA-rated government bonds, when it comes to selling. ”While the S&P downgrade in 2011 affected sentiment, there was no significant forced selling.

02

SOCIETE GENERALE

SOCIETE GENERALE：The pound struggles on days when the BOE raises rates

On August 1, economists at Societe Generale said they were bearish on the pound against the dollar and bullish on the euro against the pound due to August seasonality. The overhang surrounding Thursday's BOE rate decision should make for cautious trading in GBP, although price action in these currency pairs ahead of the announcement will likely depend on ISM manufacturing data from the US today and ADP employment data on Wednesday. The decision to raise interest rates this year has generally not been well received by the pound. Three of the four rate hikes sent GBP/USD lower on the day. Eur/GBP rallied four times. The seasonal bearish character of the pound in August is pronounced, with the pound falling against the dollar eight times and the euro rising against the pound seven times over the past decade.

03

MUFG

【MUFG：The BOJ acted stealthfully and waited to see what would happen】

July 28 - By raising the ceiling for its fixed-rate operations to 1%, the BOJ effectively widened the target range for the 10-year government bond yield, making it easier for the central bank to steer the yield target flexibly, said MUFG senior market economist Naomi Muguruma. In this sense, the central bank acted stealthily. The BOJ will likely wait to see how these measures prove effective for the time being. The BOJ will not determine the strength of wage growth and price trends until at least next spring's labor offensive gives clues on wages.