☆ TBD U.S. Treasury Secretary Yellen and U.S. Secretary of State Blinken attend the hearing
☆ 15:00 UK monthly rate of February CPI
☆ 15:00 UK monthly rate of February Retail Price Index
☆ 17:00 Eurozone seasonally adjusted Current Account for January
☆ 19:00 UK March CBI Industrial Order Expectations
☆ 22:30 EIA Crude Oil Stocks Change for the week ending March 17
☆ 22:30 EIA Strategic Petroleum Reserve Inventory for the week ending March 17
☆ The next day 02:00 The Federal Reserve interest rate resolution and economic expectations summary
☆ The next day 02:30 The Fed Chairman Powell holds a press conference
Market Overview
Review of Global Market Trend
Although the market is now betting on a 25 basis point spike in the probability of a rate hike, coupled with a sharp pickup in U.S. home sales in February from a year earlier, the market's risk appetite rose as bank stocks stabilized further. The dollar index fell below the 103 handle at one point and closed down 0.11% at 103.23.
As market demand for safe-haven ebbed, coupled with the impending Fed interest rate resolution, U.S. bond yields jumped, with the 2-year U.S. bond yield once rising 26 basis points to 4.19%. By the end of the U.S. session, it was trading near 4.17%; the 10-year U.S. bond yield rose more than 13 basis points intraday to above 3.6%, rising from 3.49% to 3.61% during the day. In addition, the German 10-year bond yield rose 18 basis points to 2.278%, on track for the biggest one-day gain since March 2020.
Spot gold suffered from the ebb of safe-haven demand and higher U.S. bond yields, intraday once from the high of the day fell nearly $50, closing barely on the $1940 mark, closing down 1.94% at $1940.52 per ounce. Spot silver was once forced under the $22 mark during the day, closing down 0.65% at $22.39 per ounce.
Previously battered crude oil closed up for the second day in a row, mainly due to a weaker dollar, a warming of market risk appetite and Russian Deputy Prime Minister Novak's claim that he would extend production cuts by 500,000 barrels per barrel to the end of June, with WTI crude closing up 2.51% at $69.46 per barrel and Brent crude closing up 1.86% at $75.14 per barrel.
U.S. stocks rose again across the board, the Dow closed up 0.98%, the Nasdaq closed up 1.56%, the S&P 500 closed up 1.31%, new energy vehicles, banking sector rose, the first Republic Bank closed up 30%, UBS closed up 12%, Xiaopeng car closed up 8%, Tesla closed up 7%; interesting headlines closed down 59%.
European stocks opened higher, Germany's DAX30 index closed up 1.77%, the UK FTSE 100 index closed up 1.81%, France's CAC40 index closed up 1.42%, the European Stoxx 50 index closed up 1.48%, Spain's IBEX35 index closed up 2.47%, Italy's FTSE MIB index closed up 2.55%.
Market Focus
1.US Treasury Secretary Yellen stated that if the banking crisis worsens, the government is prepared to provide further deposit guarantees.
2. Market risk appetite has rebounded, US bank stocks have soared, Bank of First Republic has recorded its biggest one-day gain, 2y US bond yields have surged by 25BP, gold has plummeted to $1940, and the probability of the Federal Reserve raising interest rates this week has risen.
3.The source said that Wall Street giants and US officials are discussing the possibility of First Republic Bank obtaining support from the US government.
4.A magnitude 6.9 earthquake occurred in Afghanistan, with a focal depth of 230 kilometers.
5.According to the Japanese Broadcasting Association NHK, Japanese Prime Minister Mansuo Shoda visited Ukraine on the 21st.
6.The U.S. Senate Banking Committee will hold a hearing on the bankruptcy of banks in Silicon Valley on March 28; Officials from the Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation will report to the Senate panel on Wednesday local time
7.Deputy Prime Minister Nowak of Russia: Russia is nearing the promised production reduction target of 500000 barrels per day, and the reduction will continue until the end of June.
8. Sales of second-hand housing in the United States ended a record continuous decline and recorded the largest increase since 2020.
9.The Iranian Finance Minister stated that Iran is ready to resume economic ties with all Arab countries in the Middle East region after the signing of the agreement to resume diplomatic relations with Saudi Arabia.
Geopolitical situation
1 .US lawmakers have asked President Biden to provide cluster munitions to Ukraine.
2. US Defense Department spokesman: The US is accelerating the provision of the Patriot missile system to Ukraine, and the Patriot missile training provided to Ukraine is progressing faster than expected.
3. The source said that the International Monetary Fund and Ukraine have reached a staff level agreement that will provide $15.6 billion for a new four-year plan.
4. The Ministry of Defense of Russia claims that Russian soldiers have thwarted attempts by Ukrainian nationalists to retake the lost positions in the direction of Zimmerman.
5. The Russian Ministry of Foreign Affairs said that Russia, Syria, Iran and Turkeyare coordinating the date of the Quartet consultation, which has not yet been determined.
6. According to the Japanese Broadcasting Association NHK, Japanese Prime Minister Mansuo Shoda visited Ukraine on the 21st.
7. Ukraine's parliament has voted to raise defense spending by 518 billion Ukrainian hryvnia.
8. Ukraine expects its grain harvest to decline by 17% to 44.3 million tons in 2023. As of March 21, Ukraine's grain exports fell by 20% year-on-year in the quarter.
9. International Monetary Fund: Staff estimate that Ukraine's GDP will vary between – 3% and 1% in 2023.
Institutional perspective
01
Goldman Sachs
The recent event is different from the financial crisis 15 years ago. The main issue is customers' confidence in the deposit safety of small and regional banks in the United States. At least in the short term, market volatility will remain high.
02
SOCIETE GENERALE
If the Federal Reserve raises interest rates by 25 basis points or suspends raising interest rates, the euro will return to its upward trajectory
On March 21st, economists at SOCIETE GENERALEsaid that if the Federal Reserve raises interest rates slightly by 25 basis points or suspends raising interest rates this week, as well as a small upward revision of the dot matrix, it should theoretically help the euro return to its upward trajectory against the dollar in January. However, if the Federal Reserve raises interest rates by 50 basis points and/or significantly corrects the dot matrix upward, it would be a major surprise, undermining risky assets and stifling the argument for a bullish EUR/USD.
03
MUFG
[MUFJ: If the Bank of England keeps interest rates stable, the pound may decline slightly.]
On March 21, MUFJ said that as the Bank of England had good reasons to keep interest rates unchanged on Thursday, the pound may fall, but the decline is expected to be limited. In a report, Lee Hardman, a foreign exchange analyst at MUFJ, said, “Even before recent concerns about the health of the banking system intensified, the Bank of England has been much more cautious than the European Central Bank and the Federal Reserve in terms of the need for further interest rate hikes.” He said that maintaining interest rates unchanged would bring “some downside risks” to sterling, but sterling's recent ability to adapt to risk aversion suggests that, In the short term, sterling's performance may continue to be better than expected.
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