MHMarkets：August 21, 2023 - Fundamental Reminder

☆9:15 CNY Loan Prime Rate 1Y(AUG/21)

MHMarkets

Market Overview

Review of Global Market Trend

On Friday, spot gold traded in a near-$10 range before edging up 0.03% to $1,889.42 an ounce, its fourth straight week of declines as high U.S. Treasury yields weighed on the non-interest-bearing metal. Spot silver at last check rose 0.28 percent to $22.75 an ounce, but still suffered its biggest weekly drop in nearly two months.

The dollar index continued to brush a two-month high before giving up almost all of its gains to end up 0.029 percent at 103.47, notching its fifth straight weekly gain, its longest winning streak in 15 months. The yield on the U.S. 10-year Treasury note pulled back from a high, closing down for the first time in nearly two weeks at 4.251 percent.

International oil prices rose on signs of a slowdown in U.S. production, but still ended a seven-week winning streak. WTI crude oil fluctuated to the upside, ending up 1.41 percent at $81.19 a barrel; Brent crude settled up 1.13% at $84.91 a barrel.

The three major U.S. stock indexes were mixed, with the Dow Jones Industrial Average closing up 0.08%, the Nasdaq index down 0.20% and the S&P 500 index down 0.01%, respectively, recording three straight weekly losses. The Nasdaq China Golden Dragon Index closed down 3.47%, with new energy vehicle stocks generally falling, while Wei Xiaoli closed down 7.22%, 4.31% and 4.88%, respectively. Star tech stocks closed lower, with Google down 1.89% and Tesla down 1.7%.

European stocks closed in the red, with Germany's DAX30 down 0.65 percent, Britain's FTSE 100 down 0.65 percent and Europe's Stoxx 50 down 0.35 percent.

Market Focus

1. The Netherlands and Denmark will provide F-16 fighter jets to Ukraine.

2. Ramaphosa, President of South Africa: More than 20 countries are seeking to join BRICS.

3. Turkey's central bank has targeted the banking sector to reduce exchange-rate linked deposits.

4. Germany's finance minister said the country would cut its debt and denied rumors of a tax.

5. Liquefied natural gas workers gave Woodside Energy Group Ltd. seven days' notice of the strike, according to Australian Workers Union representatives.

6. The Russian state space agency Roscoscos said it had lost contact with the lunar probe, which is believed to have crashed into the lunar surface.

Geopolitical Situation

Conflict Situation

1. The governor of Russia's Kursk region, Roman Starovoyt, says a Ukrainian drone strike on a Kursk train station started a fire that left five people slightly injured.

2. Ukrainian troops have crossed a Russian minefield north of Tokmak and are now battling Russian troops holding the city's first line of defense, U.S. officials said.

3. The head of the press center of the Russian cluster “East” Oleg Chekhov disclosed that the troops of the cluster “East” repelled several attacks of the Ukrainian army in the direction of Urozaynoye in Donetsk, destroying by artillery fire a munitions depot in the area of the old Myorskoye.

4. The General Staff of the Ukrainian Armed Forces reported that over the past day the Russian army lost 460 soldiers, as well as 6 tanks, 11 armored vehicles, 33 artillery systems and 22 tactical drones and other equipment.

5. Russian defense ministry: air defense systems prevented two drone attacks on Belgorod region.

6. UAE: the number of injured in the Russian missile attack on the center of Chernihiv rose to 148.

Assistance Situation

1. German Finance Minister Lindner reiterated on Sunday that Germany expects to provide Ukraine with financial assistance of about 5 billion euros ($5.44 billion) per year.

2. Dutch Prime Minister Rutte: The Netherlands and Denmark are committed to delivering F-16s to Ukraine. After the completion of the training, the Netherlands will send F-16s to Ukraine.

3. Danish Prime Minister: Denmark will deliver 19 F-16s to Ukraine.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs: Eurozone core inflation expected to remain high.

August 19 -- Goldman Sachs said we expect Eurozone core inflation to remain elevated and hover above 5% annually through September. We expect core inflation to decline gradually as energy prices fall and supply chain pressures ease their impact on core goods inflation, but services inflation will remain firm due to strong wage growth. Core inflation is expected to reach 4.0% y/y by 2023. Headline inflation will fall further as energy and food inflation cools, and we expect headline inflation in the euro area to reach 3.0% in the fourth quarter, before picking up to 3.5% by December 2023 due to base effects.

02

SOCIETE GENERALE

Societe Generale: The US core CPI is expected to have increased 0.3% month-over-month. A level of 0.4% or higher would signal chaos.

August 10 - We expect the US core CPI to rise 0.3% month-over-month in July, up from 0.2% in June, Societe Generale economists said. That's not a disaster, but it's not ideal, and it's not what a data-dependent Fed wants. That could help yields recoup ground lost earlier in the week amid heightened risk aversion. Month-on-month growth of 0.4% or more could signal chaos, including a hawkish repricing of the Fed, a sell-off in US Treasuries (and Bunds), swap payments, risk aversion in equities/credit/high beta FX, and dollar strength. A monthly rate of 0.2% or less would be a Goldilocks scenario: risk appetite in equity and currency markets, and a bullish flattening in 2-year / 10-year Treasuries.

03

MUFG

【MUFG：The BOJ is expected to normalize policy as soon as 2024】

The BOJ may shift its monetary policy toward normalization as early as January-March 2024, MUFG Executive President and head of global markets Hiroyuki Seki said in an interview, Kyodo News reported. He believes the BOJ is “not far” from achieving its 2 per cent inflation target as wages have risen amid Labour shortages and companies raising prices. In addition, he expects the 10-year yield to reach a range of 0.7 to 0.8% this fall, depending on price trends, currencies, foreign interest rates and the political situation.