☆ 16:30 Swiss National Bank announces its interest rate resolution
☆ 17:00 Swiss National Bank governor Jordan holds a press conference
☆ 20:00 Bank of England announces its interest rate resolution and minutes of meeting
☆ 20:30U.S. Initial Jobless Claims for the week ending March 18, and the U.S. Q4 Current Account
☆ 22:00 U.S. February Annualized New Home Sales
☆ 22:30 U.S. EIA Natural Gas Stocks Change for the week ending March 17
Market Overview
Review of Global Market Trend
The Federal Reserve just raised interest rates by 25 basis points as expected at the rate meeting, but left the terminal rate unchanged and abandoned its commitment to “keep raising rates”. As a result, the dollar index took a big dive and is narrowly missing the 102 mark, closing down 0.59% at 102.56.
U.S. bond yields also suffered heavy losses, 2-year U.S. bond yields once fell 34 basis points from the daily high, again hitting the 4% mark. As of the close of the U.S. stock market, it traded near 3.97%; 10-year U.S. bond yields once fell 21 basis points deep, which was from 3.60% to 3.44% during the day.
In addition to being boosted by U.S. bond yields, U.S. Treasury Secretary Yellen claimed that she would not consider expanding federal deposit insurance coverage, a statement that heated up market risk aversion again. Spot gold once surged more than 2% to close up 1.52% at $1970.01 per ounce, and once rose more than $40 during the day to close up $30. Spot silver once returned to the $23 mark, closing up 2.65% at $22.99 per ounce.
As OPEC+ may rule out the possibility of increasing production in the near future, crude oil continued to move higher before the Fed's interest rate resolution; but after Powell's “hawk” and Yellen's statement, oil prices have fallen, it still rose for three consecutive days. WTI crude oil once back above $71 per barrel, closing up 0.59% at $69.86 per ounce; Brent crude oil once shot up to $77 per barrel, closing up 0.79% at $75.74 per barrel; Brent crude oil once surged to $77 per barrel, closing up 0.79% at $75.74 per barrel.
Yellen's statement on deposits made U.S. stocks “scared to death”, the three major U.S. stock indexes fell sharply in late trading. The Dow closed down 1.63%, the Nasdaq closed down 1.6%, and the S&P 500 closed down 1.66%. Bank stocks were the top losers, with First Republic Bank closing down 16%, Westpac Consolidated Bank closing down 17%, Credit Suisse closing down 5% and UBS closing down 3%.
European stocks were mixed, Germany's DAX30 index closed up 0.15%, the FTSE 100 index closed up 0.42%, France's CAC40 index closed up 0.26%, the European Stoxx 50 index closed up 0.31%, Spain's IBEX35 index closed down 0.43%, Italy's FTSE MIB index closed down 0.11%.
Market Focus
1. Interest rate resolution of the Federal Reserve in March: It still emphasized the fight against inflation, unanimously decided to raise interest rates by 25BP, paid attention to the related impact of credit tightening caused by the banking crisis, maintained the median interest rate expectation for this year at 5.1%, considered suspending interest rate hike, interest rate cut is not the basic expectation for this year, and will raise interest rates to a higher level if necessary, and the recent expansion of the balance sheet is temporary and does not affect monetary policy.
2. Market reaction: The US stock market rose quickly and then closed down at 1.6%, gold closed up $30, the US index fell 60 points, the US Treasury 2Y yield fell 23BP, and the spread between 10Y and US Treasury narrowed to about 50BP. Swaps are pricing in a 70BP rate cut by the end of the year from the 4.93% peak reached in May (a sharp reversal from the Fed's dot plot), with a 50-50 chance of a rate hike in May or not.
3.The SEC charged Justin Sun with illegally selling cryptocurrency securities, according to U.S. court documents.
4. U.S. Treasury Secretary Janet Yellen: Work with the Financial Stability Oversight Council to restore the ability to classify non-bank financial institutions as systemic financial institutions for supervision. Insurance for all uninsured deposits is not considered.
5. Traders have fully priced in a 25 basis-point rate hike from the Bank of England on Thursday following the UK inflation data.
6. Opec + is likely to stick with its plan to cut output by 2 million barrels a day through the end of 2023, despite falling prices, three OPECdelegates said.
Geopolitical situation
Situation of conflict:
1. Ukrainian regional official in Kive: Three people were killed in a Russian drone strike overnight.
2. British military intelligence: Fighting continues near the town of Bakhmut and Ukraine remains at risk of siege from both north and south.
3. Mr. Zelensky visited front-line military positions near Bakhmout, according to press releases.
4. Russian Foreign Minister Sergei Lavrov: Britain's supply of depleted uranium ammunition to Ukraine is pushing the situation into a new and dangerous situation.
Institutional perspective
01
[Goldman Sachs: Congress may reconsider deposit insurancesystem ]
Goldman Sachs believes the chances of Congress revisiting deposit insurance are increasing. Congress has an incentive to address this issue for three reasons. 1) The deposit cap has not been raised since 2010 and is not indexed to inflation, so that amount should increase regularly. 2) The Federal Deposit Insurance Corporation has provided virtually unlimited guarantees. Clarifying this will reduce the possibility of bank runs without additional costs, and may potentially save some funds for the FDIC. 3) Some lawmakers, particularly Republicans, have expressed concern about the long-term prospects for small banks and the risk of deposits flowing to larger banks.
02
SOCIETE GENERALE
Mr. Powell acknowledged both risks would weigh on the dollar
March 22 news, Societe General Bank analysis said that the Federal Reserve is expected to raise interest rates by a small 25 basis points, the dot plot slightly revised, which will bring downside risks to the dollar this week. A 50 basis point rate hike would be a surprise but could offset its impact on the dollar if the dot plot does not change significantly from December. Even if the Fed raises rates, profit-taking in the US dollar could accelerate if Fed Chair Powell acknowledges tightening financial conditions and downside risks to growth.
03
[MUFJ: Powell's tone is expected to soften]
On March 22, MUFJ Bank said that the US dollar may continue to be under pressure because problems in the US banking industry may prompt Federal Reserve Chairman Powell to soften his tone at the interest rate meeting early tomorrow. Powell may convey a more subtle message suggesting that the interest rate hike cycle is about to end. Although Powell will emphasize that the fight against inflation continues, it is expected that this communication will not resonate as before.
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