MHMarkets:MHM Today News
December 1, 2022 - Fundamentals Reminder
☆ 09:45 China announced the manufacturing PMI of Caixin in November.
☆ At 17:00, the euro area announced the final value of manufacturing PMI in November.
☆ At 18:00, the Eurozone announced the unemployment rate in October.
☆ 21:30 The United States announced the number of people applying for unemployment benefits in the week ending November 26.
☆ At 21:30, the United States announced the annual rate and monthly rate of the core PCE price index in October, and the monthly rate of personal expenditure in October.
☆ 22:20 Federal Reserve Logan delivered a speech.
☆ At 22:30, Federal Reserve Governor Bowman delivered a speech.
☆ At 22:45, the US announced the final value of Markit manufacturing PMI in November.
☆ At 23:00, the US announced the November ISM manufacturing PMI.
MHMarkets - Market Overview
Review of global market trend
On Wednesday (November 30), Powell's speech boosted the rise of risk assets, and the US dollar index and US bond yield plunged in the session. The dollar index fell 1% to below 106, and finally closed down 0.77% to 106. Non US currencies rose sharply, the Australian dollar hit 0.68 against the US dollar, the British pound rose 1% against the US dollar within the day, and the offshore RMB recovered 7.05.
The yield of the 10-year US bond fell to around 3.6%; The yield of two-year US bonds once fell more than 20 basis points from the intraday high, falling to 4.33%.
Spot gold closed at US $1770 per ounce, up 1.07% to US $1768.23 per ounce. Spot silver broke through the $22 mark and closed 4.41% higher at $22.19/oz.
Crude oil went out of the independent market and rose sharply during the session. WTI crude oil rose again to $80, closing 2.01% higher at $80.48 per barrel; Brent crude oil closed 2.07% higher at USD 86.66/barrel.
As Fed Chairman Powell reiterated that policymakers would slow down the pace of rapid tightening at the meeting next month as soon as possible, US stocks rose sharply, with the Dow rising 2.17%, rebounding more than 20% from the October low, and stepping into a technical bull market. The Nasdaq Composite Index rose 4.41%, while the S&P 500 Index rose 3.02%, breaking the 200 day moving average. The NASDAQ China Golden Dragon Index closed 9.6% higher, Xiaopeng Automobile performed well, closing up 47.6%, Ideal, Weilai rose by 20%, Alibaba rose by 9.5%.
European stocks gained collectively, with Germany's DAX30 index up 0.31%, Britain's FTSE 100 index up 0.79%, France's CAC40 index up 1.04%, Europe's Stoxx 50 index up 0.75%, Spain's IBEX35 index up 0.52%, and Italy's FTSE MIB index up 0.58%.
Market Focus
1. Fed Chairman Powell: slow down rate hikes in December, but will not immediately cut rates, and will stop tapering at a safe level; terminal interest rates slightly higher than expected in September and greater uncertainty; restrictive policies have made substantial progress, but still need to continue.
2. Market reaction: U.S. stocks closed sharply higher, Dow stepped into technical bull market, U.S. bond 10Y fell nearly 20BP, U.S. dollar index fell over 100 points, offshore yuan recovered 7.05; as of this morning's interest rate futures show that the market expects the Fed to reach the peak of 4.91% of the current round of rate hikes in May next year, compared to 5.0% yesterday.
3. CNBC: The White House is considering calling on Congress to double the heating oil storage cap to build up reserves in the winter. Officials will consider releasing war reserves next year if prices spike after the Russian oil ban limit takes effect.
4. Major EU members consider lowering Russian oil price cap to $60 per barrel.
5. Two OPEC+ sources said OPEC+ cancelled the Joint Technical Committee (JTC) meeting.
6. The U.S. House of Representatives passed a revised bill to prevent rail strikes and will subsequently send it to the Senate for a vote.
7. The Federal Reserve's Brown Book on Economic Conditions: Consumer price indexes rose moderately or strongly in most regions, and interest rates and inflation continue to weigh on economic activity.
8. India lifted export restrictions on some rice including broken rice in September this year.
9. The European Central Bank will suspend its asset purchase program and reinvestment of the emergency anti-epidemic bond purchase program (PEPP) from Dec. 21 to Jan. 1.
10. 【Data】U.S. ADP employment increased by 127,000 in November, which was the smallest increase since January 2021; EIA crude oil inventory decline for the week of Nov. 25 recorded the largest since the week of June 21, 2019; Eurozone CPI preliminary annual rate of 10% in November, compared with the previous value of 10.60%.
Geopolitical Situation
Conflict Situation：
1. European Commission President von der Leyen: The damage caused to Ukraine by Russia's military action is expected to amount to 600 billion euros. Ukrainian servicemen are estimated to have lost more than 100,000 people in the conflict.
2. The Russian Defense Ministry said that the Russian Air and Space Forces tactical combat aviation and land aviation destroyed a large warehouse of the Ukrainian "Korditsa" group near Dnepropetrovsk, where ammunition for the Haymass, Hurricane and other artillery systems was stored. "
3. Russia tests new ways of using missile units and artillery in military operations in Ukraine; Russian air and space forces launch Soyuz-2.1B rockets and military satellites from the Plesetsk Cosmodrome.
4. U.S. National Security Council spokesman Kirby: military operations in Ukraine are expected to slow down, not stop, during the winter.
5. Ukrainian President Zelensky called a meeting of commanders-in-chief and said he is preparing a stronger counterattack against Russian forces.
6. Ukrainian media: Ukraine's military intelligence agency said Russia may launch a new round of conscription in January next year.
Energy Situation：
1. Major EU member states consider lowering Russian oil price ceiling to $60 per barrel.
2. National Power Company of Ukraine: Ukraine announced a 27% power shortage on Wednesday.
3. U.S. National Security Council spokesman Kirby: We can try to help Ukraine keep as much light and heat on throughout the winter.
4. U.S. Secretary of State Blinken says Russia has bombed more than a third of Ukraine's energy system in the past few weeks. NATO Secretary General Jens Stoltenberg says NATO is committed to increasing its energy support to Ukraine.
MHMarkets - Institutional Perspective
01
Goldman Sachs
The U.S. junk bond market is expected to return 11.9% in 2023.
02
SOCIETE GENERALE
The S&P 500 is expected to reach 3,800 by the end of 2023.
03
MUFG
The market "liked Powell's speech" and they had expected him to maintain the hawkish tone from this month's meeting, but he didn't make himself more hawkish
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