MHMarkets：August 28, 2023 - Fundamental Reminder

☆22:30 USD Dallas Fed Business Activity Index (AUG)

Market Overview

Review of Global Market Trend

Powell's speech in Jackson Hole on Friday night did not send a consistent signal. At first, he acknowledged progress in reducing inflation. The dollar index tumbled briefly and then suggested that more interest rates may be raised and did not rule out the next rate hike, which was seen as a hawkish signal. The dollar index erased losses and last closed up 0.08% higher at 104.16.

The yield on the 10-year Treasury note fell as much as 4 basis points before rising to 4.285% and closing near 4.24%. The yield on the two-year Treasury note, which is more sensitive to the interest-rate outlook, fell near 5% at the start of Mr. Powell's remarks before rising to near 5.1% and closing at 5.08%. Yields on the two-year Treasury note and the 10-year note both rose for two weeks in a row.

Spot gold jumped more than $10 to $1,922.5 an ounce after Powell spoke, then fell nearly $20 to close down the 1,900 mark before settling down 0.12% at $1,914.42 an ounce. Spot silver rose as high as $24.37 an ounce before closing up 0.42% at $24.22 an ounce.

Crude oil maintained its rebound, with WTI crude rising as high as $80.3 a barrel before closing up 1.42% at $79.97 a barrel. Brent crude rose as high as $84.42 a barrel before closing up 1.68% at $84.13 a barrel, while WTI crude fell for two weeks.

U.S. stock indexes opened higher as investors downplayed Mr. Powell's signal that interest rates would rise. The dow Jones industrial average closed up 0.73%, the nasdaq closed up 0.94%, and the s&p 500 index closed up 0.68% . The Nasdaq China Golden Dragon Index closed down 0.02%, while Xpeng Motor rose more than 8%. Vietnam electric car production is brushed again VinFast closing high, intraday market value above $165 billion for a time.

Major European stock indexes closed higher across the board, with Germany's DAX30 up 0.08%, the U.K. 's FTSE 100 up 0.08% and the Euro Stoxx 50 up 0.07%.

Market Focus

1. Russian authorities identified Prigozhin as one of the crash victims.

2. India had set a minimum export price of basmati rice at $1,200 per tonne.

3. India made its first uranium purchase from Russia since 2019, worth $13.5 million.

4. A plane carrying about 20 U.S. marines military plane crashes, three people have been confirmed dead.   

Geopolitical Situation

Conflict Situation

1. Russian Defense Ministry: In the early hours of the morning, Russian forces used high-precision weapons to strike the military airport in Kyiv Oblast, Ukraine. Russian air defense systems shot down two Ukrainian Su-25 warplanes, intercepted nine Hakia rockets and shot down 30 drones.

2. Air defense alerts were issued across Ukraine in the early hours of Sunday morning, according to online map data from the Digital Transformation Department of Krane.

3. Military Administration in Kyiv, Ukraine: Ukraine's air defense system helped repel a Russian air strike on the outskirts of Kyiv.

4. Russian media: Ukrainian forces fired five 155mm cluster shells into the Kyiv district of Donetsk on Sunday morning.

5. Ukraine's military says it destroyed four cruise missiles in Russian airstrikes overnight.

6. Ukrainian Security Service: The Ukrainian Security Service used a suicide drone to attack Kursk airport in Russia on the night of the 26th.

Institutional Perspective

01

Goldman Sachs

Goldman Sachs：Replacing human jobs with AI could boost the enterprises profits by 20%.

02

SOCIETE GENERALE

【SOCIETE GENERALE：The dollar is still the most popular currency】

August 24 - Although currency markets are still in the summer doldrums, the US dollar is still the top in the market, said Kit Juckes, chief global FX strategist at Societe Generale. In August, dollars all the way higher, and is expected to continue to rise, until the BOJ takes action (They will not meet again until September 22nd). Either European data (unlikely) gets better or US data be weak or Fed officials adopting a more cautious tone at Jackson Hole.

03

MUFG

The BOJ bond buying speed record The necessity of increasing yield curve control policy

The Bank of Japan has bought government bonds at a record pace this year, which may be one factor prompting the bank to allow yields to fluctuate in a wider range in the near term, reducing pressure on it to keep long-term rates under control. The BOJ still hasn't significantly reduced its bond purchases after widening the yield curve control band in December and last month. The step-up in purchases after each change also raises the question of whether the BOJ is moving too slowly to adjust policy and would have to be aggressive to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at MUFJ Morgan Stanley Securities, said that if the BOJ reduced its bond purchases, market participants would take it as a signal that it was close to exiting its easing policy, which will push yields higher and forcing it to buy more.