Chapter 37  2023.8.22 Daily News

August 22, 2023 - Fundamental Reminder

☆22:00 USD Existing Home Sales (JUL)& Richmond Fed Manufacturing Index (AUG)

☆NYMEX New York crude oil September futures are affected by the month shift. The last trading on the floor will be completed at 2:30 on August 23 and the last trading on the electronic market will be completed at 5:00 am. Please pay attention to the announcement of the month expiration on the trading floor to control risks. In addition, some trading platforms often expire one day before the NYMEX official.

☆The next day at 2:30 a.m., 2023 FOMC voting Committee member and Chicago Fed President Goolsbee speaks on youth employment. At 3:30, 2023 FOMC Voting Committee, Chicago Fed President Goolsbee, and Fed Governor Bowman participate in a fireside chat.

Market Overview

Review of Global Market Trend

Spot gold remained choppier on Monday, hitting as high as 1,898.83 before settling up 0.25% at $1,894.76 an ounce as investors awaited Powell's speech at the Jackson Hole annual conference on Friday. Spot silver came out of the independent market, standing above the 23 mark, and finally closed up 2.28 percent at $23.32 an ounce.

The dollar index hovered near a two-month high before ending slightly down 0.116 percent at 103.35. Real and nominal Treasury yields surged, with the yield on 10-year Treasury inflation-protected securities rising above 2% for the first time since 2009; Yields on 2-year Treasury notes rose above 5%; The 10-year yield hit its highest level in 15 years, closing at 4.35%; The 30-year yield reached its highest level since April 2011.

International oil prices have pulled back amid signs that supply may be rebounding and lingering demand concerns. WTI crude briefly dipped below the 80 mark before settling down 0.51% at $80.62 a barrel; Brent crude settled down 0.13% at $84.64 a barrel.

The three major U.S. stock indexes were mixed, with the Dow Jones Industrial Average closing down 0.1 percent, the Nasdaq climbing steadily throughout the day to close up 1.5 percent, and the S&P 500 up 0.69 percent. Nvidia, which reports earnings this week, closed up more than 8%. New energy vehicles performed well, with Tesla up 7%, Xpeng up nearly 10%, NIO and Li Auto both up more than 2.5%. The Nasdaq China Golden Dragon Index closed up 0.8%.

Major European stock indexes were mixed, with Germany's DAX30 closing up 0.19%, Britain's FTSE 100 down 0.06% and the Euro Stoxx 50 up 0.28%.          

Market Focus

1. ARM officially submitted its IPO application in the US.

2. Singapore's Prime Minister Lee Hsien Loong announced that he would hand over power.

3. Nvidia jumped more than 8% overnight and is set to challenge new all-time highs again.

4. Japanese media: Japan will start discharging contaminated water from the Fukushima nuclear plant as early as August 24.

5. Foreign media: The BRICS summit is likely to discuss expanding local currency settlement.

6. The yield on U.S. 10-year Treasury inflation-protected securities has risen above 2% since 2009.

7. The risk of a U.S. government shutdown in October has increased as conservatives in the House propose new conditions.

8. San Francisco Fed Research: The Fed is more divided than ever on the direction of interest rates.

9. Us media: Biden is considering meeting with Saudi Arabia's crown prince at the G20 summit next month, or pushing for a big deal.

Geopolitical Situation

Conflict Situation

1. Russia's Kaluga region successfully prevented a drone strike, regional officials said.

2. Russian forces have shot down a drone in the Moscow region, according to Interfax.

3. Russia says its military intercepted two Ukrainian drones that crashed into the Black Sea.

4. Ukrainian media: The drone attack on a military airport in Kaluga, Russia, was coordinated by Ukraine's military intelligence service and caused damage to at least one Russian aircraft, said the spokesman of the Ukrainian Defense Ministry's General Intelligence Directorate, Yuri Yusov.

Food Situation:

1. According to the Financial Times: Ukraine in talks with Global insurers for insurance of grain ships.

2. Erdogan: Turkey's foreign minister may visit Russia soon to discuss a food deal.

3. According to Interfax: The Russian Economy Minister said that a draft proposal to extend export duties on sunflowers, oil and sunflower meal until August 31, 2024 has been agreed upon and submitted to the Russian government.

Institutional Perspective


Goldman Sachs

【Goldman Sachs:It means little unless Saudi Arabia is a member of the BRICS "expansion"】

Jim O 'Neill, a prominent Goldman Sachs economist and veteran, said that if Saudi Arabia is part of the BRICS expansion, "it will matter economically, otherwise it won't matter much." Saudi Arabia, which is preparing to send a delegation to the meeting, is interested in working with BRICS and discussing joining the group, according to people familiar with the matter. If Saudi Arabia does join, Mr. O 'Neil said, a key question would be what it would mean for its oil sales to other countries. "The first question is whether they will actually price oil in those currencies [the BRICS 'common currency] rather than in dollars," O 'Neill said. A key goal of the BRICS is to reduce their reliance on the US dollar by making more payments in member currencies, with long-term ambitions including launching a common currency to challenge the greenback.



SOCIETE GENERALE:The US core CPI is expected to have increased 0.3% month-over-month. A level of 0.4% or higher would signal chaos

August 10 - We expect the US core CPI to rise 0.3% month-over-month in July, up from 0.2% in June, Societe General Bank economists said. That's not a disaster, but it's not ideal, and it's not what a data-dependent Fed wants. That could help yields recoup ground lost earlier in the week amid heightened risk aversion. Month-on-month growth of 0.4% or more could signal chaos, including a hawkish repricing of the Fed, a sell-off in US Treasuries (and Bunds), swap payments, risk aversion in equities/credit/high beta FX, and dollar strength. A monthly rate of 0.2% or less would be a Goldilocks scenario: risk appetite in equity and currency markets, and a bullish flattening in 2-year / 10-year Treasuries.



The BOJ record pace of bond purchases increases the need to adjust yield curve control policies

The BOJ has bought government bonds at a record pace this year, which may be one factor prompting the bank to allow yields to fluctuate in a wider range in the near term, reducing pressure on it to keep long-term rates under control. The BOJ hasn't significantly reduced its bond purchases after widening the yield-curve band in December and last month, and the ramp-up after each change raises questions about whether the central bank is moving too slowly to adjust policy and would have to go too far to stop investors from pushing yields too high. Naomi Muguruma, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, said that if the BOJ reduced its bond purchases, market participants would take it as a signal that it was close to exiting its easing policy, pushing yields higher and forcing it to buy more.

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