January 31, 2023-Fundamental Reminder
☆ 07:30 Japanese unemployment rate in December
☆ 09:30 China's official manufacturing PMI in January
☆ 14:30 Initial value of GDP annual rate in the fourth quarter of France
☆ 15:30 Switzerland's actual annual retail sales rate in December
☆ 15:45 French monthly CPI rate in January
☆ 16:55 Germany's quarterly adjusted unemployment rate in January and the number of unemployed people in Germany after the quarterly adjustment in January
☆ 17:30 Bank of England mortgage loan permit in December
☆ 18:00 Initial value of GDP annual rate in the fourth quarter of the euro area
☆ At 21:00, the initial value of German January CPI monthly rate
☆ 21:30 Canada's monthly GDP rate in November and the quarterly labor cost index rate in the fourth quarter of the United States
☆ 22:00 The monthly rate of FHFA house price index in November and the annual rate of S&P/CS20 big cities in November
☆ 22:45 Chicago PMI in January
☆ 23:00 Consumer confidence index of the American Chamber of Commerce in January
☆ API crude oil inventory for the week from 05:30 the next day to January 27
Market Overview
Review of Global Market Trend
As the “Super Central Bank Week”, themarket focus is still on the dynamics of the Federal Reservein this week. Although the market is still betting that the Federal Reserve will slow the rate increase to 25 basis points on Thursday, the latest article of the “Federal Reserve mouthpiece” said that the overheated labor market may exacerbate inflation concerns in the United States. The dollar index rebounded after falling to 101.66 and regained the 102 level, closing up 0.34% at 102.24.In addition to the FOMC meeting, the risk aversion triggered by the attack on Iran's defense facilities also boosted the US index.
The yield of US Treasuries rose generally on Monday, with the yield of 10-year US Treasuries rising by more than 5 basis points, from 3.51% to 3.54% within the day. The yield of 2-year US Treasuries rose more than 6 basis points to 4.27% in the intraday, hitting a new intraday high since January 12. As of the closing of US equities, the trading volume was around 4.24%.
Spot gold once returned above the US $1930 level, but with the continued rise of the US dollar, gold once pushed down to the US $1920 level, closing down 0.23% at US $1923.2/ounce, falling for three days in a row, and has given up most of its gains in the previous two weeks. Spot silver fell to US $23.49/ounce in the intraday, but it closed basically stable and closed up 0.01% at US $23.61/ounce.
Crude oil fell to a two-week low because the supply of Russian crude oil subject to Western sanctions remained strong, and two representatives said that the OPEC+Joint Ministerial Monitoring Committee (JMMC) was unlikely to recommend OPEC+change its production policy on February 1, which also brought downward pressure on oil prices.As of the close, WTI crude oil fell 2% to US $77.78/barrel, while Brent crude oil fell 1.54% to US $85.03/barrel. Some analysts said that before the meeting of European and American central banks, the market's risk aversion was also hurting the price of risky assets, including crude oil.
Due to the continuous decline in the amount of natural gas transported from Russia to Europe through Ukraine, the European benchmark TTF Dutch natural gas futures rose 5.5% to a daily high of 58.4 euros/megawatt hour, but fell 2.7% in the end, hovering at the low level of one and a half years. Because the market believes that the decline of Russian gas supply may be related to the warmer weather in Europe since January this year and the reduction of consumer demand for energy.
The positive line of the US stock market for six consecutive trading days ended on Monday, with the Dow ending down 0.77%, the Nasdaq and the S&P 500 closing down 1.96% and 1.27% respectively. Tech stocks remained weak throughout the day, with Tesla closing down 6.3%. The Nasdaq China Golden Dragon Index closed down 4.09%, Alibaba and Xiaopeng fell more than 6%, and Bilibili and Zhihu closed down at 9%.
Most European stocks ended lower, including Germany's DAX30 index down 0.14%, Britain's FTSE 100 index up 0.27%, France's CAC40 index down 0.21%, Europe's Stoxx 50 index down 0.45%, Spain's IBEX 35 index down 0.11%, and Italy's FTSE MIB index down 0.35%.
Market Focus
1. The WHO committee agreed that the COVID-19 pandemic remains a public health emergency of international concern.
2. According to the Associated Press: Biden will declare an end to the U.S. state of emergency for the COVID-19 pandemic on May 11.
3. Sources said Glencore shipped 40,000 tons of Russian aluminum metal to the warehouse in Guangyang Port, South Korea approved by LME.
4. The Russian government issued an order prohibiting oil exporters from complying with the price cap on Russian oil exports set by the West.
5. British media: EU to relax tax credit restrictions in response to U.S. green subsidy bill.
6. Two representatives said OPEC+'s monitoring committee is unlikely to recommend a change in OPEC+'s production policy on Feb. 1.
7. The U.S. Treasury raised its borrowing estimate for the quarter to a more-than-expected $932 billion, maintaining the quarter-end cash balance at $500 billion.
Geopolitical Situation
Conflict Situation：
1. Ukrainian Defense Minister Reznikov: Ukraine will start fighting with tanks assisted by Western countries this spring.
2. Air defense sirens were sounded in Odessa, Nikolaev, Kirovograd and Kherson regions of Ukraine.
EnergySituation：
1. The Russian government issued an order prohibiting oil exporters from complying with Western-established price caps on Russian oil exports.
2. Russian Foreign Minister Sergei Lavrov said during his meeting with Pakistani Foreign Minister Bilawal that the two countries intend to expand energy cooperation.
3. Market news: Russia plans to increase diesel exports in February despite the current EU ban.
Assistance Situation：
1. Biden: The United States will not provide F-16 fighter jets to Ukraine.
2. Some U.S. military officials are pushing the Defense Department to approve the supply of F-16 fighter jets to Ukraine, according to people familiar with the situation.
3. French Defense Minister: Australia and France have agreed to cooperate in manufacturing artillery shells for Ukraine; thousands of 155mm shells will be supplied to Ukraine jointly.
4. Polish Prime Minister: Poland can transfer F-16 fighter jets to Ukraine only after coordination with NATO; Military spending will be raised to 4% of GDP by 2023.
5. Macron: does not rule out supplying fighter jets to Ukraine. (Satellite News)
6. NATO Secretary General: We urge South Korea to strengthen military assistance to Ukraine.
Institutional Perspective
01
Goldman Sachs
The U.S. natural gas market will enter a bear market cycle.
Goldman Sachs expects the U.S. natural gas market to enter a bear market cycle in 2023-2024. The market has seen a bearish trend as natural gas production continues to grow while growth in U.S. LNG export capacity is paused. Goldman Sachs acknowledges that current U.S. Henry Hub natural gas price levels have definitely not formed a hard bottom, and that warmer weather and lower heating demand could drive U.S. natural gas prices further down. Current natural gas prices will stimulate enough coal gas to replace natural gas and will dampen expected production growth by the end of the year. Goldman Sachs lowered its 2023 summer U.S. natural gas price estimate to $3.70 per million Btu from a previous $4.15 per million Btu and lowered its 2023-2024 winter gas price estimate to $3.60 per million Btu from $4.05 per million Btu.
02
SOCIETE GENERALE
The Eurozone will not fall into recession this winter.
Societe Generale said that the latest economic data increasingly confirms our view that the Eurozone will not fall into recession this winter. We now no longer expect a technical recession in Germany, one of the countries most severely affected by the energy supply shock last year, as German GDP did not fall in the fourth quarter. This means that the Eurozonewill grow at close to 1% this year, only slightly below potential growth. Unlike the ECB, we believe that Eurozonegrowth will also continue to be below potential next year as the impact of interest rate hikes and higher energy prices gradually emerge. We expect fourth-quarter Eurozone GDP next Tuesday to show 0.2% quarter-on-quarter growth.
03
MUFG
The pound could fall if the Bank of England issues a cautious outlook.
The pound is at risk of falling as the Bank of England may issue a cautious policy outlook at its next meeting, Mitsubishi UFJ said. Mitsubishi UFJ analyst Lee Hardman said in a report that the Bank of England is expected to raise rates by 50 basis points at its Feb. 2 meeting, but the market is now fully pricing in the bank cutting rates by at least 25 basis points by the end of the year. Given the increasingly dovish outlook for U.K. interest rates later this year, market participants expect guidance for next week's rate hike to suggest that the central bank will be more cautious about the need for further rate hikes. Hardman said this may pose downside risks to the pound.
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