Financial Breakfast on September 18: Risk aversion rebounded, the US dollar hit a new high in more than three weeks, and gold stayed above 1,750
As the global market turned to safe-haven on September 17, the U.S. stock market and commodities fell, and the US dollar index climbed 93.24, the highest level since August 23. Spot gold was basically stable, closing at around $1,754, but it fell for the second consecutive week. The strong retail sales data previously announced by the United States may strengthen the reason for the Fed to reduce its stimulus soon. U.S. oil fell due to the gradual recovery of oil production in the Gulf of Mexico, which was affected by the hurricane, and Russia plans to increase overseas oil sales.

On Friday (September 17), the U.S. dollar hit a more than three-week high, supported by the better-than-expected US retail sales data released on Thursday, which supported the Fed’s expectation that the Fed will reduce its asset purchase plan before the end of the year. Gold futures closed lower and recorded a third consecutive day of decline and a second consecutive week of decline. The US dollar strengthened before the Fed’s policy meeting next week, putting pressure on spot gold prices. As market risk appetite cooled, oil production in the Gulf of Mexico gradually recovered, and oil prices fell, falling from their highest level since the end of July.
Commodity closing, COMEX December spot gold futures closed down 0.3% to 1,751.40 US dollars per ounce; WTI October crude oil futures closed down 0.64 US dollars, or 0.88%, to 71.97 US dollars per barrel, the cumulative increase of more than 3.0% this week, the first consecutive Four weeks of gains; Brent's November crude oil futures closed down 0.33 US dollars, or 0.43%, to 75.34 US dollars per barrel.
US stocks closed: the S&P 500 index fell 0.9% to 4,432.99 points; the Dow Jones Industrial Average fell 0.5% to 34,584.88 points; the Nasdaq Composite Index fell 0.9% to 15043.97 points; the Nasdaq 100 index fell 1.2 %, reported 15333.47 points.
List of major global markets
The U.S. stock market closed sharply lower on Friday and suffered a broad sell-off, which was affected by a combination of factors, including strong economic data, concerns about corporate tax increases, the delta variant virus, and the Fed's possible change in its asset purchase schedule. The three major U.S. stock indexes closed down, and the Nasdaq Index was hit, as the rise in U.S. Treasury yields put pressure on leading growth stocks. Trading volume and volatility rose sharply near the close of the market because of the "first day of the three witch gatherings" that occurs once every quarter, that is, stock options, stock index futures and stock index options contracts expire at the same time.
David Carter, chief investment officer of Lenox Wealth Advisors, said that the market is struggling to cope with the prospect of tightening fiscal policy due to tax increases and the prospect of tightening monetary policy due to the Fed's reduction in debt purchases. The stock market today is slightly weaker, partly due to poor consumer confidence data, Carter added, which raises concerns that the Delta variant may slow economic growth.
The potential increase in corporate taxes may erode profits and put pressure on the market. Democratic leaders seek to increase the maximum corporate tax rate from the current 21% to 26.5%.
Precious metals and crude oil
Gold prices stabilized on Friday, and the trend of a slight rebound in the severe selling of the previous trading day lost momentum. As the US dollar rose, investors were concerned about the Fed's reduction strategy. Saxo Bank’s head of commodity strategy, Ole Hansen, said that the market has stabilized today, but we need to see the price of gold stay above US$1,780 per ounce before we can assert that the risk of further falling to a few-month low below US$1,700 has been eliminated.
Earlier this week, data showed unexpected growth in US retail sales in August, rekindling concerns about the Fed's early reduction of asset purchase plans, boosting the dollar, and causing gold prices to plummet by nearly 3% on Thursday.
Daniel Pavilonis, senior market strategist at RJO Futures, said that the market already believes that the Fed will slow down its bond purchases, which will drive U.S. Treasury yields higher. This is not a good sign for gold, and the price of gold is likely to fall.
The dollar hit a three-week high, making gold more expensive for holders of other currencies, and the benchmark U.S. bond yields have also risen.
Now the focus of the market turns to the Fed meeting on September 21-22, and investors look forward to clues to the timing of underweight bond purchases.
Oil prices fell on Friday. U.S. crude oil fell 0.76% in late trading to US$71.82 per barrel, as energy companies in the Gulf of Mexico restarted production after the ensuing hurricane in the region stopped production.
Nishant Bhushan, an oil market analyst at Rystad Energy, said that oil prices have reached such high levels in the past few days, apparently due to supply disruptions and reduced inventories, so now U.S. oil production is recovering and crude oil prices are falling as expected.
After hurricanes "Nicholas" and "Ada" reduced offshore oil production by 26 million barrels, the Gulf of Mexico began to resume crude oil exports. Foreign media reported on Thursday that about 28% of crude oil production in the U.S. Gulf of Mexico is still shutting down.
Foreign exchange
As the global market turned to safe-haven, US stocks and commodities fell, and the US dollar index climbed to a nearly four-week high. The foreign exchange market was generally quiet on Friday, and traders were reluctant to build new positions until a series of important central bank meetings, including the Fed, the Bank of Japan and the Bank of England, next week.
The US dollar index rose 0.38% to 93.22 in late trading, the highest level since August 23. The index rose 0.65% this week, the largest increase since the week ended August 20. Recent trading patterns show that the dollar’s gains usually peak around the 20th of the month. The U.S. 10-year Treasury bond yield climbed to 1.37%.
The University of Michigan's consumer confidence index rose slightly to 71 in September, and the final value in August was 70.3. However, analysts said that overall, this improvement is far from the improvement in the manufacturing surveys of the Federal Reserve Bank of New York and the Federal Reserve Bank of Philadelphia. . After the University of Michigan survey was announced, the dollar held on to gains.
The Fed will hold a two-day monetary policy meeting next week. It is expected to start discussions on slowing down its monthly bond purchases, while at the same time linking any actual changes to employment growth in the United States in September and beyond.
Capital Economics market economist Jonathan Petersen wrote in his latest research report that although we doubt whether the Federal Open Market Committee (FOMC) will formulate a plan to reduce asset purchases, given the constant cyclical inflationary pressures Increase, the new economic forecast may give people an understanding of its response mechanism. Our view remains that US inflation will remain high for longer than the current expectations of the FOMC and investors, thereby supporting the rise in US yields and the strengthening of the US dollar.
The euro to dollar fell 0.36% to 1.1725, closing at its lowest level since August 23. Marvin Barth, global head of foreign exchange strategy at Barclays, said that we continue to predict that the euro will perform the weakest among the G-10 currencies. It is expected that the euro will continue to fall to 1.15 next year; he believes that the German election and lack of fiscal union pose risks to the exchange rate.
The euro against the Swiss franc remains strong, and the dollar against the Swiss franc is at a 5-month high after breaking through the resistance level. The U.S. dollar rose 0.17% to 109.92 against the yen, affected by short covering and expectations of continued overseas investment by Japanese investors.
The British pound fell 0.41% to 1.3739 against the US dollar; retail sales in the UK unexpectedly fell for the fourth consecutive month in August, the largest drop in at least 25 years; however, as investors moved forward their estimates for the Bank of England’s interest rate hike to mid-2022, the British pound Still supported.
The trade-sensitive currency reversed the early gains in New York. The U.S. dollar rose 0.64% to 1.2764 against the Canadian dollar. As the last weekend before the election is approaching, Canadian Prime Minister Trudeau and his Conservative opponents are close to tie, and Trudeau is re-elected. Still larger. The New Zealand dollar fell 0.51% to 0.7039 against the US dollar; the Australian dollar fell 0.18% to 0.7279 against the US dollar
International news
[Biden warns: If the US debt defaults, I am afraid that pension payments will be a problem] The White House issued a warning letter to state and local governments on Friday, stating that “reaching the debt ceiling may lead to economic recession. Economic growth will be unstable, and the unemployment rate is expected. Rising, the labor market may lose millions of jobs.” The risk of US debt default may trigger an economic recession and curb the issuance of federal aid. The White House urged Congress to raise or suspend the federal borrowing limit to avoid a debt crisis. Biden said in the warning letter that disaster relief funds, Medicaid, child health insurance plans, and funds for education, infrastructure and child nutrition may be interrupted.
[The Fed's use of reverse repurchase tools on Friday (September 17) was US$1.218 trillion, a record high]
[ECB Management Committee Makhlouf: Some ECB officials believe that inflation forecasts are too low. Some of us do believe that the current forecast of 1.5% inflation in 2023 is too low. It needs to be discussed and debated. Although the acceleration of inflation is temporary, if you look a little farther, almost beyond the medium term, I agree that the pressure may last longer]
[IHS Markit cuts its automotive production forecasts with unprecedented strength, analysts are shocked] Due to the global chip shortage, IHS Markit has made unprecedented adjustments to its production forecasts that have been continuously lowered this year. IHS Markit lowered its production forecast for this year by 6.2%, or 5.02 million vehicles, and lowered its forecast for next year by 9.3%, or 8.45 million vehicles. This expected revision reflects the challenges faced by the automotive industry in the supply chain disaster. Analysts on Friday expressed shock at the expected revision of IHS. "The downgrade of the 2022 forecast is a big surprise," Credit Suisse's Dan Levy wrote. "As far as we know, this is the largest annual reduction in IHS's history."
Domestic news
[The investor threshold is 500,000! The third batch of rules of the Beijing Stock Exchange is here. Investor appointments will be opened immediately.] The Beijing Stock Exchange issued the "Beijing Stock Exchange Investor Suitability Management Measures (for Trial Implementation)": Individual investors participate in the stock trading of the Stock Exchange and apply for permission to open In the first 20 trading days, the assets in the securities account and the capital account shall not be less than RMB 500,000 per day (excluding the funds and securities that the investor has acquired through margin trading and securities lending), and he shall participate in securities transactions for more than 24 months.
[Shanghai Futures Exchange: After research and determination, starting from the trading on September 23, 2021 (that is, the evening and night trading on September 22), the trading fee for intraday closing of stainless steel futures Ss2110 and Ss2111 contracts will be adjusted to 18 yuan/hand]
[China's autumn grain purchases are expected to increase by 20 billion jin compared to the same period last year] Qin Yuyun, Director of the Grain Reserve Department of the State Administration of Grain and Material Reserves, revealed on the 17th that due to multiple measures taken by various localities to promote autumn grain production, the sown area of mid- and late rice in China remained stable, and corn sown The area has increased greatly, and the autumn grain is expected to have another bumper harvest. Accordingly, the purchase volume will also increase. According to the situation in various places, it is estimated that about 350 billion catties will be purchased during the peak season of autumn grain, an increase of about 20 billion catties year-on-year. (China News Network)
[Shipping prices have risen and then risen, it is still difficult to predict when to cool down] At present, international shipping prices have risen to the forefront. Due to the surge in demand for commodities, the epidemic disrupted the supply chain and caused a surge in freight rates. The global shipping industry’s daily revenue hit 13 New year high. Many people in the industry said that as shipping prices continue to hit historical highs, the risks are also increasing. On the one hand, due to rising freight costs and increased procurement costs, some demand is decreasing; on the other hand, many shipping companies continue to build new ships and containers. Project, once supply and demand break, it will bring the risk of overcapacity. At present, the industry still has no definite consensus on when the freight rate can be lowered, but it is certain that the high price is increasing the risk, and relevant companies should start to think about the future. (Securities Times)
Bonus rebate to help investors grow in the trading world!