MHMarkets：MHMarkets：August 14, 2023 - Fundamental Reminder

☆No important financial data and events during the day.

Market Overview

Review of Global Market Trend

On Friday, affected by the U.S. inflation leading indicator PPI exceeded the expected rebound, spot gold intraday diving, down nearly $10 from the daily high, and finally closed up 0.07% at $1913.32 per ounce; spot silver range shock, and finally closed down 0.05% at $22.67 per ounce.

The dollar index rallied after the release of the PPI data and finally closed up 0.224% at 102.88, close to its high since early July and reaping two consecutive daily and four consecutive weekly gains. U.S. bond yields strengthened further, with the two-year U.S. yield closing at 4.899% and the 10-year U.S. yield closing at 4.158%.

International crude oil closed higher for the seventh consecutive week, renewing the longest winning streak in more than a year. As the IEA expects record global crude oil demand coupled with declining supply will drive oil prices to climb subsequently, WTI crude oil shocked higher, which was the end of the gains narrowed, and ultimately closed up 0.22% at $83.1 per barrel; Brent crude fell more than 1%, and ultimately closed up 0.3% at $86.71 per barrel.

The three major U.S. stock indexes were mixed, with the Dow closing up 0.3%, the S&P 500 closing down 0.1%, and the Nasdaq closing down 0.68%. Among the Dow components, Chevron closed up 2.0%, Merck Pharmaceuticals gained 1.7% and Disney fell 3%. The Nasdaq posted its first two consecutive weekly losses this year.

Major European stock indexes closed lower across the board, with Germany's DAX30 closing down 1.03%, Britain's FTSE 100 closing down 1.24% and Europe's Stoxx50 closing down 1.43%.

Market Focus

1. Zelensky admits Ukraine attacked Crimea bridge.

2. Goldman Sachs: Fed will cut rates in Q2 next year, 25 BP per quarter.

3. Musk wants to fight in Zuckerberg's backyard first: to your doorstep tomorrow.

4. Iranian officials: Iranian oil exports more than 1.4 million barrels per day, exceeding the level of the budget plan.

5. Hawaii wildfire death toll rises to 93, U.S. media: rebuilding Hawaii after wildfires could cost $5.5 billion.

6. Argentina's 2023 election primaries kicked off, the preliminary results of the primaries are expected to be unveiled between the night of the 13th and the early morning of the 14th.  

Geopolitical Situation

Conflict Situation

1. Russian Defense Ministry: Russian forces shot down Ukrainian drone over Belgorod Oblast.

2. Russian Defense Ministry: The Russian army repelled five attacks from the direction of Kerman. The enemy lost more than 80 fighters in this operation.

3. Russian Defense Ministry: Russian forces hit the forward command post of the Ukrainian army's 9th Corps in Zaporizhzhia Oblast. A total of 137 areas were hit on Sunday against enemy manpower and equipment.

4. The General Staff of the Ukrainian armed Forces issued a war report on the same day, saying that in the past 24 hours, the Ukrainian air force carried out multiple strikes on the concentration of Russian manpower and equipment, attacking Russian air defense missile systems, artillery positions and other military equipment and facilities.

5. According to the Interfax news agency, the Russian Defense Ministry said that Russian forces fired warning shots at a Palauan-flagged dry cargo ship near Ukraine.

6. InformNapalm, an international intelligence agency, said Russia had failed to inspect the Sukru Okan, dispatched helicopters and fired warning shots, as observed by sailors on other merchant ships.

7. Mr. Zelensky acknowledged Ukraine's attack on the Crimean bridge.

Institutional Perspective

01

Goldman Sachs

【Goldman Sachs：The Fed will cut rates by 25BP quarterly in Q2 next year】

August 14, Goldman Sachs said in a research note released in the early morning of the 14th that our benchmark forecast is that the Federal Reserve's FOMC will start to cut the federal funds rate in the second quarter of 2024. We expect quarter-on-quarter rate cuts. The FOMC could cut rates more quickly if it became more confident that inflation would not return.

02

SOCIETE GENERALE

Societe Generale: expects US Core CPI to rise 0.3% m/m, and a level of 0.4% or perhaps higher would mean chaos.

August 10, we expect U.S. core CPI to rise 0.3% month-over-month in July, up from 0.2% in June, economists at Societe Generale said. That's not a disaster, but it's not ideal either, and not what a data-dependent Fed wants to see. It could help U.S. bond yields regain ground lost earlier in the week during a period of heightened risk aversion. A 0.4% or higher YoY increase or implies a chaotic scenario that could include a hawkish repricing of the Fed, a sell-off of U.S. Treasuries (and German Bunds), swap payouts, risk aversion in equities/credit/high-beta FX, and a strong U.S. Dollar, among other things. And a monthly rate of 0.2% or lower would be the Goldilocks scenario: equity and FX market risk appetite, and bullish flattening of 2yr/10yr US bonds.

03

MUFG

【MUFG: Japan's first trade surplus in nearly two years, which is expected to support the Yen】

August 10, MUFG said that over time, Japan's shift to a trade surplus will become a “key” factor in supporting the yen exchange rate. Earlier this week, Japan released data showing that the country's first trade surplus since October 2021, the size of the largest since July 2021, too. Derek Halpenny, head of global market research for Europe at MUFG, noted that “the fading of the negative energy price shock is a crucial fundamental shift for the yen.” As Japan's energy supply is mostly dependent on imports, last year's energy price spike on the yen exchange rate and Japan's current account pressure, but in the wake of a sharp decline in natural gas imports, the corresponding pressure has ceased to exist, which means that the dollar against the yen to further higher space or has been limited.