February 18 Financial breakfest

On Wednesday (February 17), the US dollar index hit a new high since February 8 to 91.05. Optimistic economic data and signs of rising inflation helped push the dollar higher. Spot gold fell for five consecutive days, refreshing its lowest point since November 30 last year to US$1,769.65 per ounce. The strengthening of the US dollar and better-than-expected US economic data reduced gold’s attractiveness as a haven. Oil prices rose by more than 2%, and U.S. oil and Bursa oil hit their highest points since January last year to 61.73 US dollars/barrel and 64.96 US dollars/barrel respectively. The severe cold weather caused US oil production to plunge by a record 40%.

Commodity closing, COMEX April gold futures closed down 1.5%, at 1,772.80 US dollars per ounce. WTI March crude oil futures closed up 1.09 US dollars, or 1.81%, to 61.14 US dollars per barrel; Brent April crude oil futures closed up 0.99 US dollars, or 1.56%, to 64.34 US dollars per barrel.

The three major US stock indexes closed mixed. The Dow Jones index closed up 90.30 points, or 0.29%, to 3,161,302 points; the S&P 500 index closed down 1.30 points, or 0.03%, to 3,931.32 points; the Nasdaq index closed down 82.00 points, a decrease of 0.58%, to 13,965.49 points.

Thursday preview

Time Area Index Previous value Predicted value
08:30 Australia January seasonally adjusted unemployment rate (%) 6.6 6.5
08:30 Australia January employment-population change (10,000 people) 5 3
18:00 Eurozone January unseasonally adjusted CPI annual rate final value (%) 0.9

18:00 The final value of the core CPI annual rate in the Eurozone without seasonal adjustment in January (%) 1.4 0.9
21:30 U.S. January construction permit monthly rate (%) 4.5 -1.6
21:30 U.S. Total number of construction permits in January (10,000 households) 170.9 167.7
21:30 U.S. January import price index monthly rate (%) 0.9 1
21:30 United States January import price index annual rate (%) -0.3 0.4
21:30 United States January annualised monthly rate of housing starts (%) 5.8 -0.7
21:30 U.S. Annualised total number of housing starts in January (10,000 households) 166.9 165.8
21:30 United States As of February 13, the number of initial claims for unemployment benefits (10,000) 79.3 77.3
21:30 United States As of February 6th, the number of people claiming unemployment benefits (10,000) 454.5 442.3
23:00 Eurozone February Consumer Confidence Index Initial Value -15.5 -15
00:00 AM U.S. EIA crude oil inventory changes in the week ending February 12 (10,000 barrels) -664.5

00:00 AM U.S. EIA refined oil inventory changes in the week ending February 12 (10,000 barrels) -173.2

00:00 in the morning U.S. EIA gasoline inventory changes in the week ending February 12 (10,000 barrels) 425.9

07:05 Dallas Fed President Kaplan participated in an online dialogue event hosted by the Dallas Fed to discuss the US and global economic issues

20:30 ECB announces minutes of a monetary policy meeting

21:00 Federal Reserve Governor Brainard delivers a speech

23:00 2021 FOMC voting committee and Atlanta Fed President Bostic delivers a speech

List of major global markets

The three major U.S. stock indexes” the Dow Jones Industrial Average closed at a record high, the S&P 500 closed flat, while the Nasdaq Composite Index fell; U.S. bond yields fell from a one-year high, investors weighed Economic growth and inflation outlook.

State Street Global Investment Management US SPDR ETF chief investment officer Michael Arone said that those companies whose earnings are vulnerable to inflation and cannot support their current high valuations are under selling pressure, including technology stocks. At some point, rising yields may Bringing shock, but I don’t think it’s there yet.

Precious metals and crude oil

Gold futures prices closed down for the fourth consecutive trading day, closing at the lowest level since June 2020. According to Dow Jones market data, the most active gold futures contract appeared on Wednesday for the first time since June 2018, 50%. The daily moving average crosses the 200-day moving average, indicating that the long-term price trend may be down in the future. Analysts said that rising U.S. Treasury yields are usually conducive to the rise of the dollar, both of which are bad for gold prices.

Oil prices rose by more than 2%, and U.S. oil and Bursa oil hit their highest points since January last year to 61.73 US dollars/barrel and 64.96 US dollars/barrel respectively. The severe cold weather in Texas, the largest oil-producing state in the United States, led to the suspension of oil fields in the state and abnormally cold weather. It is expected to drag down crude oil production in the next few days or even weeks.

Oil prices supported by factors such as OPEC+ supply restrictions, additional cuts in Saudi production, and hopes that new crown vaccination will lead to a rebound in demand. The historic cold weather in Texas since last weekend has further pushed up oil prices. Most of the crude oil supply in the United States comes from Texas, which is part of the major refining centres in the United States.

Due to unprecedented cold weather freezing oil well operations in the United States’ central region, the United States’ daily oil production has fallen by more than 4 million barrels. Refinery shutdowns triggered by severe cold weather have reduced U.S. crude oil demand. According to Bob Yawger, head of energy futures at Mizuho in New York, this brings us to a higher level. The price of US crude oil may reach its peak near US$65.65.

The rising prices environment has made people more concerned about OPEC+, and the alliance will meet on March 4 to formulate policies. OPEC+ sources said that given the rebound in oil prices, the alliance’s oil-producing countries might relax supply restrictions after April.

Foreign exchange

The dollar rose on Wednesday, hitting a new high since February 8 to 91.05. Optimistic economic data and signs of increasing inflation helped push the dollar higher against a basket of currencies. The dollar index rose from the three-week low touched last Friday, rising 0.40% to 90.94 in late trading. The US retail sales, industrial production and producer price index (PPI) data released on Wednesday exceeded expectations. This shows that as vaccination progresses, the momentum for the economy to recover from the pandemic-induced recession is increasing.

Marc Chandler, the chief market strategist at Bannockburn Forex, said that today’s retail sales data is not only stronger than expected but far exceeding expectations. The same is valid for industrial production data. The dollar trend started yesterday, and what we see today is a continuation. Many people are still bearish on the dollar, but there is more room for this upward trend.

The Federal Reserve released the minutes of its monetary policy meeting on January 26-27. Participants stated that they need to “be vigilant” in the light of the recent economic rebound. They also discussed the expected rise in inflation and reiterated easing policies to support the ailing job market. Nothing is surprising about the meeting minutes.

Chandler said that in general, there is not much new information in the minutes of the Fed’s meeting, and the market is looking forward to the testimony of Fed Chairman Powell next week.

Despite the optimistic economic report, US Treasury yields reversed the recent upward momentum due to weakening selling pressure. The 10-year U.S. Treasury yield fell back to 1.270% at the end of the session and was as high as 1.331% earlier in the session.

The euro fell 0.56% against the US dollar to 1.2038. The pound fell 0.33% against the dollar to 1.3857, after hitting its highest level since April 2018 on Tuesday.

During the Asian trading hours, the dollar-yen, which is sensitive to US yields, rose to 106.22, the highest since September last year, and fell back to 105.87 in late trading, down 0.16%.

In other currency pairs, the Australian dollar fell 0.09% to the US dollar to 0.7751; the New Zealand dollar fell 0.33% to 0.7191 against the US dollar; the US dollar rose 0.72% to the Swiss franc to 0.8989; the US dollar rose 0.09% to the Canadian dollar to 1.2702.

International news

[Minutes of the Federal Reserve Meeting: The conditions for reducing the intensity of QE cannot be met for “a time”] The Federal Reserve released the minutes of the January FOMC monetary policy meeting, stating that it may take some time for the US economy to make substantial progress. I am afraid that the conditions for reducing the intensity of asset purchases (QE) will not be met “for a while”. He is optimistic about inflation, but he is cautious about the labour market. Before adjusting the speed of asset purchases, it is essential to communicate with the public. The degree of improvement in the medium-term outlook has been sufficient for the Fed to adjust its views in its interest rate resolution statement.

[API report: U.S. crude oil inventories decreased by 5.8 million barrels to 468 million barrels last week] As of the week of February 12, API gasoline inventories increased by 3.9 million barrels, refined oil inventories decreased by 3.5 million barrels, and Cushing crude oil inventories decreased by 3 million Barrels; US crude oil imports increased by 26,000 barrels per day last week.

[It is reported that crude oil production in the Permian Basin in the United States was frozen due to severe cold weather. Crude oil production in the Permian Basin fell by 80%, and US crude oil production fell by more than 40% or 4 million barrels per day.]

[Fed Rosengren: It is expected that inflation data will improve overtime this year. If inflation becomes a problem, the Fed will fix it. It is estimated that inflation cannot be maintained at around 2% in the next one or two years. There is indeed a “bubble” in some parts of the market, but people are less concerned about financial stability before the economy is close to full employment]

Ramsden said that the central bank has further room to expand its bond purchase program to stimulate the economy. This statement may indicate that prominent bank officials may be unwilling to Lower interest rates below zero. Ramsden said that the Bank of England might reassess some restrictions on the bank’s purchase of British government bonds in the financial market. He said that although the central bank does not rule out negative interest rates, quantitative easing is a “tested tool.” These remarks show that although the Bank of England expects that the new crown vaccine’s promotion can lead to a robust economic recovery, the central bank does not rule out the possibility of increasing stimulus measures.

Texas bans many natural gas companies from sending energy outside the state. Texas will extend its ban on foreign natural gas sales until February 21. Texas still has 19,800 megawatts (MW) of natural gas power capacity offline, and 17,200 MW of wind/solar (000591, share bar) power capacity is still offline.

[US SEC considers increasing short-sale transparency] The Wall Street Journal (blog, Weibo) quoted a source saying that the US Securities Exchange is considering whether to increase the transparency of short-sales and private lending to the soaring share price of Game Post. Eleven years ago, the authorities asked the SEC to implement such rules, but they never realised it. Now, in response to the stock trading frenzy caused by the game station incident, the US Securities and Exchange Commission is considering increasing the transparency of short-selling transactions within its scope of authority.

Domestic news

[Securities Daily front page: Five reasons for institutions to sing more A shares, the first week of the ox year may welcome a “good start” market] The industry generally believes that compared with the past Spring Festival market, the probability of the stock market rising after the holiday this year is higher. Most institutions said that the five reasons might help A shares usher in the first week of “good start.” First of all, the market has a higher probability of rising after the holiday. Secondly, the surrounding markets continue to “rising”. During the Chinese New Year holiday, the A-share market was boosted by economic recovery expectations, and “rising” became the keynote of major global markets. Third, commodity prices have hit new highs. Fourth, the RMB exchange rate’s appreciation has made RMB assets increasingly attractive to international capital, and foreign investors favour shares. Fifth, market funds are abundant. The inflexion point of liquidity tightening that some market participants worry about has not appeared. Industry insiders believe that, in the context of the upcoming launch of larger-scale economic stimulus plans in Europe and the United States, my country does not have the basis for immediate tightening of liquidity.