June 13, 2023 - Fundamental Reminder
☆ TBD OPEC announces its monthly crude oil market report
☆ TBD Domestic oil products open a new round of price adjustment window
☆ 20:30 USD Inflation Rate YoY n.s.a (MAY) & USD Inflation Rate MoM s.a (MAY) & USD Core Inflation Rate YoY n.s.a (MAY)
The market expects the USD Inflation Rate YoY n.s.a (MAY) to slow sharply to 4.1%, if the data is in line with expectations, it will support the Fed to skip the rate hike this week.
☆ 22:00 BoE Governor Bailey receives questioning
☆ The following day at 04:30 USD API Crude Oil Stock Change (JUN/09)
Market Overview
Review of Global Market Trend
Data was light on Monday, although the latest New York Fed survey showed that U.S. consumers' inflation expectations for the year ahead fell to a two-year low since May 2021. But medium-term inflation expectations such as three and five years rebounded modestly, something the Fed will be watching closely given anxiety over unstable inflation expectations. The dollar index closed up 0.11% at 103.64.
U.S. bond yields all closed lower, but the 10-year U.S. bond yield rose to 3.79% during the day and turned lower in late trading; the two-year U.S. bond fell from 4.61% to 4.58% during the day.
Spot gold was suppressed by the higher dollar and U.S. bonds, and lost the $1,950 mark during the session, closing down 0.16% at $1,957.6 per ounce. Spot silver lost the $24 mark during the session and closed barely above the mark, down 0.89% at $24.06 per ounce.
Crude oil is under pressure due to the demand outlook and concerns over the expected supply of Russian and Iranian oil, plus crude oil "firm bulls" Goldman Sachs cut crude oil target price for the third time in six months, the U.S. crude oil and Brent crude oil suffered a "bloodbath" on Monday. WTI crude oil once fell nearly 5% during the day, closing down 4.24% at $67.31 per barrel; Brent crude oil fell more than 4% during the day, closing down 3.81% at $72.1 per barrel.
The three major U.S. stock indexes closed up collectively, the Dow closed up 0.56%, the S&P 500 index closed up 0.97%, and the Nasdaq closed up 1.53%. Peng car rose 11%, Azera car rose 8.8%, ideal car closed down 1.9%, and Tesla rose 2.2%, which was the 12th consecutive trading day rose; Apple closed up 1.5%, which was a new closing high, the total market value of nearly 2.9 trillion U.S. dollars.
European stocks rebounded across the board, Germany's DAX30 index rose 0.90%; Britain's FTSE 100 index rose 0.10%; France's CAC40 index rose 0.52%; Europe's Stoxx 50 index rose 0.61%; Spain's IBEX35 index rose 0.38%; Italy's FTSE MIB index rose 0.87%.
Market Focus
1. New York Fed survey: U.S. one-year inflation expectations fall to 4.1%, which is a two-year low.
2. U.S. House Speaker McCarthy met with party hawks in a bid to address the latter's suspended House-wide activities.
3. UBS completed the acquisition of Credit Suisse.
4. Iranian side said there are no negotiations on replacing the Iran nuclear deal.
5. Bridgewater Fund founder Rui Dalio: suggested that gold allocation in portfolio should be around 15%.
6. It is reported that EU antitrust authorities will charge Google with abusing advertising technology or order the latter to sell part of its advertising technology business.
7. Overnight the NASDAQ closed up 1.5%, Apple shares hit a new closing high with a market value of nearly $2.9 trillion, Tesla rose for 12 consecutive trading days to set a record for the longest streak, Oracle continued to hit a new record high; international oil prices plunged over 4%.
Geopolitical Situation
Conflict Situation
1. According to RIA Novosti: The Russian Defense Ministry says Ukrainian forces have continued to try to attack the South Donetsk region in the past 24 hours.
2. U.S. Secretary of State John Blinken says Ukraine is in the early stages of a counter-offensive. French President Emmanuel Macron says the Ukrainian counter-offensive has begun and has been carefully planned. The Serbian president says the Ukrainian counter-offensive has only just begun and may be several times stronger (than it is today).
3. In the city of Melitopol, Zaporozhye region, local Ukrainian partisans blew up a railroad bridge in the town of Yakomivka; in Crimea railroad traffic was suspended due to a damaged railroad.
4. According to Ukrainska Pravda: the Ukrainian Armed Forces regained control over the settlement of Storozhove in Donetsk region, which had been occupied by Russian troops since March 2022, killing about 50 Russian soldiers during the operation.
Food Situation
1. Ukraine's Black Sea grain exports rose 65% last week to about 65,318 tons. Ukrainian ports have shipped more than 31 million tons of crops since the agreement was launched last July.
2. Ukraine: Poland's subsidies to farmers do not comply with WTO rules.
3. UN Secretary General Guterres: Fears that Russia will withdraw from the Black Sea grain deal next month.
Institutional Perspective
01
Goldman Sachs
Goldman Sachs cuts oil price expectations three times in six months to fuel market concerns, oil prices extend downtrend.
On June 13, Goldman Sachs lowered its December oil estimate for Brewery to $86 from the previous $95 per barrel and lowered its WTI crude oil estimate to $81 from $89 per barrel, the third time in six months that it has cut oil price expectations. Rebecca Babin, a senior energy trader at CIBC Private Wealth, said that in addition to Goldman Sachs, the former crude oil "majority", lowering oil price expectations again, the spot market indicators are also shaking the confidence of the bulls. They expect the oil market to shift from a glut to a shortage in the coming months. Timing spreads, a trader's tool for assessing supply and demand dynamics, continue to deteriorate, fueling massive risk aversion and prompting shorts to keep pressure on oil prices.
02
SOCIETE GENERALE
【Societe Generale: 10-Year U.S. and German Treasury Spreads Expected to Narrow】
On June 2, Societe Generale interest rate strategists wrote in a report that there is room for a narrowing of the 10-year U.S. Treasury/German bond yield spread, which is consistent with the usual trend around the last Fed rate hike. They said, "Eurozone core inflation has yet to plummet, while the ECB's stance is less restrictive than the Fed's." They said, "This has helped narrow the spread between U.S. Treasuries and U.S. Treasuries." The yield spread between 10-year U.S. Treasuries and 10-year German Bonds currently stands at 135 basis points, with the 10-year U.S. Treasury yielding about 3.62% and the 10-year German Bond yielding about 2.27%, according to Tradeweb.
03
MUFG
【Mitsubishi UFJ: Norway's central bank may increase interest rate hikes, boosting the Norwegian krone】
On June 12, Mitsubishi UFJ Financial Group foreign exchange analyst Lee Hardman said in a report that the Norwegian krone should appreciate if the Bank of Norway accelerates the pace of interest rate hikes at its next meeting after the recent release of higher-than-expected inflation data. Norway's central bank has hinted that it plans to raise rates further at its June 22 meeting and will be under pressure to raise rates for a longer period of time, possibly even by 50 basis points. A hawkish policy response from the Norwegian central bank would help provide more support for the Norwegian krone, which has been severely undervalued since the beginning of this year.
