MHMarkets：August 7, 2023 - Fundamental Reminder

☆At 7:50, the BOJ will release a summary of the opinions of the members of its July monetary policy meeting. Investors can watch for the reasons for widening the YCC band and whether it will reveal when monetary policy normalization will take place.

☆At 20:30, Fed Governor Susan Bowman will deliver a speech after she hinted over the weekend that further rate hikes may be needed to cool inflation.

Market Overview

Review of Global Market Trend

On Friday, the U.S. dollar index fell sharply during the session on the back of a slightly worse than expected U.S. non farm payrolls report for July, briefly falling below 102 to an intraday low of 101.75, before recovering some of its losses to end down 0.47% at 102. In U.S. Treasury yields, the two-year yield plunged from an intraday high of 4.953% to end at 4.762%; The yield on the 10-year Treasury retreated to near 4% before settling at 4.042%.

Spot gold rose more than $20 from its low and reached an intraday high of $1946.90, lifted by a pullback in the dollar index and Treasury yields. It ended up 0.45% at $1942.86 per ounce, but still had its worst weekly performance in six weeks. Spot silver at last check was up 0.28% at $23.63 per ounce, but still closed in the green for the third straight week.

As a result, Saudi Arabia and Russia continued to reduce supply, and crude oil continued to rise on Friday, up more than 1% at one point in the session and notching its sixth straight weekly gain. WTI crude rose above $82 and ended up 1.11% at $82.59 per barrel. Brent crude settled up 0.96% at $85.99 per barrel.

U.S. stocks opened higher and lower, with the Dow Jones Industrial Average down 0.43%, the S&P 500 down 0.53% and the Nasdaq down 0.36%. The Nasdaq China Golden Dragon Index fell more than 1%, while Apple closed down 4.8%, dropping its total market value to $2.85 trillion; Amazon closed up 8.27%; Daily excellent fresh closed up more than 280%, intraday soared 370%.

Major European stock indexes closed mixed, with Germany's DAX30 up 0.37%, the U.K. 's FTSE 100 up 0.47% and the Euro Stoxx 50 up 0.66%.      

Market Focus

1. Barbie will cross $1 billion at the global box office.

2. India put the Chandrayaan-3 probe into lunar orbit.

3. Musk: The match with Zuckerberg will be streamed live on X.

4. Cocoa prices are at a 12-year high as global supplies fall.

5. One person was killed when a tugboat sank after colliding with an oil tanker in the Suez Canal.

6. The Japanese military closed its airspace, saying foreign powers were preparing for military intervention.

7. Polish pipeline operator PERN: “Friendship” pipeline leak, expected to resume oil flow on Tuesday morning.

Geopolitical Situation

Conflict Situation

1. According to the Ukrainian National News Agency, Ukrainian air defenses intercepted 30 Russian cruise missiles and 27 suicide drones yesterday.

2. The General Staff of the Ukrainian Armed Forces reported that the Russian army lost 590 soldiers over the past day, as well as 5 tanks, 11 armored vehicles, 22 artillery systems and 10 tactical drones, among other equipment.

3. Ukrainian President Zelensky says a Russian missile strike on Saturday hit a facility of the Ukrainian aviation group Motor Sich.

4. Russian Defense Ministry: attacked air bases in Ukraine's Rivne and Khmelnytskyi regions.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs cuts European gas price forecasts across the board through summer 2025 on lower-than-expected demand.

02

SOCIETE GENERALE

Societe Generale: Non farm payrolls are expected to increase by 190,000 in July, but any increase above 150,000-175,000 is strong growth. The unemployment rate will fall back to 3.5% and average hourly earnings growth will slow to a monthly rate of 0.3%.

03

MUFG

MUFG: According to the Fed's dot plot, the Fed could still raise rates again in 2023. Chairman Powell previously emphasized in his press conference that there are two more inflation and employment reports before the next meeting and they are not ready to signal that. As a result, the September rate decision will remain rooted in dependence on the next data. If the data before the September FOMC meeting is strong, then the Fed could raise rates again by 25 basis points in a row. If the Fed raises rates again and there are no credit events between now and the end of the year, we will revisit our rate path projections and make adjustments as needed. However, at this time, we will not change our federal funds rate path forecast because we believe the long-term and variable lagged effects will hit the economy hard in the second half of the year through early 2024.