MHMarkets -December 22, 2022-Fundamental Reminder
☆ 15:00 U.K. releases the final value of annual rate of GDP in the third quarter and current account in the third quarter.
☆ 21:30 U.S. releases initial jobless claims for the week ending Dec. 17.
☆ 21:30 The U.S. releases the final value of annualized quarterly rate of real GDP in the third quarter, the final value of quarterly rate of real personal consumption expenditures in the third quarter and the final value of annualized quarterly rate of core PCE price index in the third quarter.
☆ 23:00 U.S. releases the monthly rate of Conference Board leading index for November.
☆ 23:30 U.S. releases EIA natural gas inventories for the week ending Dec. 16.
MHMarkets -Market Overview
Review of Global Market Trend
On Wednesday, December 22, the dollar index stopped its two-game losing streak and regained the 104 barrier, closing up 0.25% at 104.23. The dollar regained the 132 barrier against the yen, the pound lost 1.21 against the dollar, and the euro fell slightly against the dollar but remained steady above 1.06.
U.S. Treasury yields fell, the 10-year U.S. bond yield fell below 3.7%, trading near 3.67%; 2-year U.S. bond yield from 4.28% to 4.22%. 2/10-year U.S. bond yield curve inversion degree is the narrowest since November 15.
Spot gold forced the 1810 mark under before the U.S. session, but broke through the 1820 mark at the beginning of the U.S. session, eventually closing down 0.18% at $1814.64 per ounce; spot silver fell below the 24 mark, closing down 0.73% at $23.97 per ounce.
International oil prices rose more than $2 on Wednesday, up three days in a row. Earlier data showed a larger-than-expected reduction in U.S. crude oil inventories, but gains were limited as the U.S. is set for a snowstorm expected to affect people's travel plans.WTI crude oil broke through $78 per barrel, closing up 3.19% at $78.41 per barrel; Brent crude oil closed up 3.12% at $82.21 per barrel.
European natural gas prices fell to their lowest level since June 14 as near-record LNG imports and higher-than-normal inventories further eased supply concerns. The benchmark European natural gas futures contract settled 7.5%lower, falling below 100 euros per megawatt-hour for the first time in more than a month.
U.S. stocks closed higher on Wednesday, buoyed by a recovery in consumer confidence. The Dow closed up 1.60%, the Nasdaq closed up 1.54% and the S&P 500 closed up 1.49%. Most sectors rebounded stronger, with the education and social media sectors rising collectively. Nike closed up about 12% after the performance, Xiaopeng Auto closed up about 11%, and Beili Beili closed up about 5%. Nasdaq China Golden Dragon Index closed up 3.7%, Aiki closed up 22%.
European stocks generally closed sharply higher, Germany's DAX30 index closed up 1.56%, the UK FTSE 100 index closed up 1.78%, France's CAC40 index closed up 2.01%, the European Stoxx 50 index closed up 1.86%, Spain's IBEX35 index closed up 1.42%, Italy's FTSE MIB index closed up 1.59%.
Hot spots in the market
1. Indonesia will ban the export of bauxite from June 2023.
2. The United States released drugs from war reserves due to the epidemic of influenza.
3. Putin: We will continue to improve the operational readiness of nuclear forces.
4. Iranian Foreign Minister: Iran is ready to reach the final step of the Iran nuclear agreement.
5. The US Q3 current account recorded US $-217.1 billion, the smallest deficit since Q2 last year.
6. Zelensky visited the United States to meet with Putin, and Ukraine received assistance from Patriot air defense systems.
Geopolitical situation
Conflict situation:
1. Putin: We will continue to improve the operational readiness of nuclear forces. The proportion of Russia's modern nuclear trinity weapons reached 91%.
2. Russian Defense Minister Shoigu: Russia will continue to carry out “special military operations” in Ukraine in 2023. Russia needs to expand its military strength to 1.5 million people.
3. The Russian Ministry of Defense said that in the direction of South Donetsk, the Russian army launched artillery attacks on the 72nd Mechanized Brigade of Ukraine and the 108th National Brigade of the Turkish Defense Forces, and the Ukrainian army lost nearly 50 people.
4. The Russian Ministry of Defense said that during the attack in the direction of Donetsk, the Russian army occupied new advantageous highlands and positions, killed more than 80 Ukrainian soldiers and destroyed 8 pieces of military equipment in one day. The Russian army destroyed two artillery ammunition depots of the Ukrainian army in Kharkov and Zaporoge one day.
5. According to Russian media, the Ukrainian army fired 14 missiles at the center of the capital of the “Donetsk People's Republic”, injuring at least 10 people.
6. Shoigu: Russia has always been open to constructive peace negotiations. In 2022, Russia's “trinity” nuclear strike force successfully practiced large-scale retaliatory nuclear strikes against the enemy in special exercises. The Russian Defense Ministry plans to hold the “West-2023” exercise next year.
Energy situation:
1. According to the Kommersant, from December 1 to 20, Russian oil exports fell by 11% month on month.
2. The source said that as Poland and Germany seek to replace Russian crude oil, the oil import volume through the Baltic Sea Gdansk in December will reach a record 2.6 million tons.
3. Putin attended the opening ceremony of the operation of the Kovikta gas condensate field and the Kovikta Chayanda section of the “Siberian Power” gas pipeline in Irkutsk, Russia, and delivered a speech online.
4. According to Agence France Presse, the European Union Statistics Bureau said that in order to adapt to the energy crisis, the natural gas consumption of EU countries in the past four months has decreased by 20%.
Food situation:
1. According to Tass, the export quota of chemical fertilizer in Russia exceeded 11.8 million tons.
2. Minister of Agriculture of Ukraine: Ukraine's wheat export surplus in 2022/23 is expected to be 16.3 million tons. The surplus of grain exports in 2022/23 is 49.2 million tons.
Assistance:
1. The senior US defense official said that the systematic training of Ukrainian patriots will start soon, and it is expected that the training will take several months.
2. The Secretary of State of the United States announced that he would provide Ukraine with military assistance worth 1.85 billion dollars, including the Patriot missile air defense system. The United States Defense Department said that the additional assistance would also include the ammunition of “Hamis” and “Ham” anti radiation missiles.
3. Biden: The United States will provide 374 million dollars of new humanitarian assistance to Ukraine.
MHMarkets-Institutional Perspective
1. Goldman Sachs：The Bank of Japan is expected to withdraw from the negative interest rate policy in the next step.
2. SOCIETE GENERALE：With the Bank of Japan stimulating hedging, the yen's surge has just begun.
Bank of France said that Bank of Japan Governor Kuroda announced on Tuesday that he would double the maximum yield of 10-year government bonds. This sudden policy adjustment shocked the market and also increased the pressure of international investors in the country to hedge their foreign assets, which is expected to further push up the yen exchange rate.Juckes, chief foreign exchange strategist of the Bank of France, said that as Japanese fund managers gradually adapt to the Bank of Japan's tougher stance, the dollar/yen exchange rate may fall to 125 in January next year, and the currency/exchange rate will fall by more than 3% on Tuesday, which means that the yen will rise by 6% compared with the current level in the future.
3. MUFG：There are similarities between the sharp fall of the US yesterdayand Japan in 1998.
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