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Market News Financial breakfast on November 23: Biden nominated Powell for re-election, the US dollar hit a 16-month high, gold plunged 2% and approached the 1800 mark
Financial breakfast on November 23: Biden nominated Powell for re-election, the US dollar hit a 16-month high, gold plunged 2% and approached the 1800 mark
On November 22, the US dollar index rose to 96.55, the highest level since July 2020. US President Biden nominated Powell for re-election as the chairman of the Federal Reserve, triggering market expectations that the Federal Reserve may tighten policy sooner. As the yields of the U.S. dollar and U.S. bonds rose sharply, spot gold fell by more than 2%, hitting a new low of $1802.41 per ounce since November 5, the biggest drop in more than two months. Oil prices fluctuated higher, and the market speculated that if the United States coordinated with other countries to release crude oil reserves, OPEC and its allies might not increase supply to the market as planned.
2021-11-23
9195
On Monday (November 22), the U.S. dollar index hit a 16-month high, and U.S. bond yields climbed as U.S. President Biden nominated Powell for re-election as the chairman of the Federal Reserve and nominated Federal Reserve Board Member Brainard as the vice chairman. COMEX gold futures for December delivery fell 45.3 US dollars, or 2.45%, to close at 1806.3 US dollars per ounce, recording the largest one-day drop in three and a half months. The exchange rate of US Treasuries and the US dollar rose, putting pressure on gold prices. As oil prices closed up, Japan was considering releasing crude oil reserves to curb the rise in oil prices, but the Organization of the Petroleum Exporting Countries and its allies (OPEC+) responded that they would promote a reassessment of the crude oil production increase plan.
Commodity closing, COMEX December gold futures closed down 45.30 US dollars, or 2.4%, the largest one-day decline in more than three months; WTI January crude oil futures closed up 0.81 US dollars, or 1.06%, to 76.75 US dollars per barrel; Buren Special January crude oil futures closed up 0.81 US dollars, or 1.26%, to 79.70 US dollars per barrel.
US stocks closed: the S&P 500 index fell 0.3% to 4,682.94 points; the Dow Jones Industrial Average rose 0.1% to 35,619.25 points; the Nasdaq Composite Index fell 1.3% to 15,854.76 points; the Nasdaq 100 index fell 1.2 %, reported 16,380.98 points; Russell 2000 index fell 0.5%, reported 2331.348 points.
23:00 The Governor of the Bank of England Bailey and Deputy Governor Cunliffe are inquired by the British Parliament on the issue of the central bank's digital currency
The sell-off of technology stocks in the last hour caused the U.S. stock market to close lower for the second day in a row. U.S. President Biden nominated Powell for re-election as the chairman of the Federal Reserve. The S&P 500 index fell in the last hour before the close, and the Nasdaq 100 index fell more than 1%. The S&P 500 index maintained its upward trend for most of the session, but technology stocks favored by hedge funds were sold off, dragging the stock index below the previous close.
Biden had been swaying between Powell and Brainard before and finally decided to nominate Brainard as the vice chairman of the Federal Reserve. The US consumer price index has risen to its highest level in decades, and inflation expectations have risen to its highest level since 2013. More and more people worry that the Fed may lose its initiative in curbing inflation.
CIBC Private Wealth Management Chief Investment Officer David Donabedian said that in fact this decision did not change anything. The problem is still the same, that is, the Fed's judgment that inflation is only temporary is incorrect. If it is incorrect, how do they plan to respond? Choosing to re-elect Powell is entirely a consideration of policy continuity. Powell, who was nominated for re-election, had no worries about the Fed or more easily showed a hawkish stance.
The price of gold fell more than 2% on Monday, and spot gold hit a new low since November 5 to $1802.41 per ounce. After Biden nominated Powell for re-election as the chairman of the Federal Reserve, the U.S. dollar rose sharply, sparking expectations that the Fed may insist on reducing economic support.
Kitco Metals senior analyst Jim Wyckoff said that gold has been sold because the market believes that, contrary to the nomination of Brainard, the Fed may maintain its current monetary policy line. He added that the nomination of Brainard would be seen as paving the way for a more dovish policy. This is just a knee-jerk reaction from the gold market. The dollar rose to its highest level since July last year. Powell's nomination for re-election also led to a jump in U.S. bond yields.
The money market now expects that the Fed will raise interest rates by 25 basis points by June next year, instead of July as previously expected.
Fed policymakers are debating whether to withdraw support more quickly to deal with inflation. Earlier, Fed Vice Chairman Clarida made a comment, implying that the central bank will discuss the idea of accelerating the reduction of asset purchases at the upcoming December meeting.
Oil prices fluctuated higher, and the market speculated that if the United States coordinated with other countries to release crude oil reserves, OPEC and its allies might not increase supply to the market as planned.
If oil-consuming countries jointly release oil reserves, OPEC+ oil-producing countries may adjust its production increase plan; OPEC+ representatives said that when the organization meets next week, the original moderate production increase plan may now need to be reassessed.
According to people familiar with the matter, US President Biden is preparing to announce plans to release strategic oil reserves in conjunction with several other countries as early as Tuesday. These countries may include India, Japan and South Korea. This move will be an unprecedented move by major oil-consuming countries to curb energy prices soaring. .
John Kilduff, the founding partner of Again Capital LLC, said that the battle line has been opened. Of course, OPEC and Saudi Arabia can win because all the cards are in their hands. They can reduce the supply so that it exceeds the scale of countries releasing strategic oil reserves. If WTI falls below $70, then I expect OPEC+ to respond; OPEC+ led by Saudi Arabia and Russia will meet next week to discuss plans to increase production by 400,000 barrels per day in December.
The dollar index rose 0.55% to 96.51, the highest since July 2020. Joe Manimbo, senior market analyst at Western Union Business Solutions, said that Powell's re-election nomination shows that the outlook for monetary policy is not as dovish as if under Brainard's leadership. It seems that under Powell's leadership, there is more room for interest rate hikes in the United States. Powell continues to serve as the chairman of the Federal Reserve, which is generally positive for the dollar.
The euro fell to its lowest level against the US dollar since July 2020 as the market considered the risk of further blockades in Europe due to the resurgence of the epidemic. The euro fell 0.47% to 1.1237 against the dollar. Profit-taking before the Thanksgiving holiday in the United States eased the decline; 1.12 option barriers may provide further support.
Concerns about Europe’s new restrictive measures intensified, Austria entered another complete blockade, and Germany also considered following suit, which also dragged down the euro.
Manimbo said that this is to some extent a combined blow to the euro. One is the surge in new cases throughout the Eurozone, which has strengthened the outlook for the European Central Bank’s policy to be absolutely dovish. It is in sharp contrast with the Federal Reserve, which is facing increasing pressure to speed up the normalization of its policies.
The dollar rose 0.78% against the safe-haven yen to 114.88, approaching the four-and-a-half-year high of 114.97 touched on November 17.
Mike Schumacher, Zachary Griffiths, and Erik Nelson of Wells Fargo Securities wrote in a report that this rapid response is not good for inflationary assets. The dollar generally strengthened, but the yen fell the most after the announcement. The direction of the market trend is intuitive and in line with our expectations, but we expect the market to calm down in the next one or two days.
The pound fell 0.40% to 1.3397 against the US dollar, risk aversion enveloped the market, the pound fell against the US dollar earlier, because the Bank of England policymakers' remarks raised questions about the certainty of interest rate hikes in December.
The U.S. dollar rose 0.47% against the Canadian dollar, hitting a seven-week high of 1.2705. Scotiabank analysts said in a report on Friday that, given that more lockdown measures may be announced in the coming days and weeks, risk-sensitive currencies such as the Canadian dollar may be on the defensive, while falling oil prices will Bring additional drag.
The New Zealand dollar fell 0.69% to 0.6958 against the US dollar; the Reserve Bank of New Zealand is expected to raise interest rates for the second consecutive month, and hinted that in the case of labor shortages, it will adopt a more aggressive tightening cycle to curb inflation.
[On November 22, local time, US President Biden announced that he would nominate the current Federal Reserve Chairman Jerome Powell for re-election. Subsequent nomination will be submitted to the Senate for confirmation]
[Fed Chairman Powell: The economy is expanding at the fastest pace in many years. Looking forward to working closely with Brainard. Economic growth is expected to bring maximum employment. Tools will be used to prevent deep-rooted inflation]
[US Treasury Secretary Yellen: Indeed, we must worry about US inflation. I am very pleased with Biden's selection of personnel for the chairman and vice chairman of the Fed. I believe their nomination will be widely supported by Capitol Hill]
[Powell, who has been nominated for re-election, has no worries, the Fed is more likely to show a hawkish stance] With the nomination of the Fed chairman’s nomination settled, the simple fact is that the Fed may become slightly more hawkish, which will give the short-term interest rate market more control. Bet to add fuel to the fire. There has been a significant repricing in the market, largely related to the fact that Brainard, the unselected candidate, is considered to be less inclined to tighten monetary policy than the current Jerome Powell. In addition, Powell, who has no re-election concerns, may act more freely and implement the less expansive policies necessary in the eyes of observers. Mark Cabana, director of US interest rate strategy at Bank of America, believes that Powell's door to a more hawkish stance may be open.
[Iranian Ministry of Foreign Affairs: The window to return to the Iranian nuclear agreement will not be open to the United States forever] Iran’s Ministry of Foreign Affairs spokesman Khatibzad said at a regular press conference on November 22 that Iran hopes to be held later this month. The restart of the Iranian nuclear talks in the Austrian capital Vienna can reach a "pragmatic and comprehensive agreement" on the lifting of sanctions against Iran. If the Iran nuclear agreement cannot bring specific economic benefits to Iran or help Iran to normalize its foreign trade, "the United States should know that this window will not open forever."
[LPR has remained flat for 19 consecutive months: It is unlikely that the MLF interest rate will be lowered during the year] Wang Qing, chief macro analyst at Oriental Jincheng, said that since the second half of the year, LPR quotations have remained stable, showing that monetary policy has adhered to a stable and important tone and focused on passing Structural policy tools such as small re-lending and carbon emission reduction support tools are directed to increase support for weak links in the national economy and promote structural reforms under the background of controllable economic downward pressure. (Securities Daily)
[Public offering big guys look forward to next year's market and are most likely to make stable and profitable money] Cheng Xi, senior fund manager of E Fund, believes that mobile phones, the Internet, and smart home appliances in the later stages of growth can be configured in accordance with the logic of consumer stocks. Electric vehicles and photovoltaics, including the downstream applications of 5G, which are in the early stages of growth, are now the core of scientific and technological profits and income, and are the focus of the fund's attention. In addition, there are strong expectations and explosive possibilities for chips and new materials. China's management of liquidity and capital market is much stricter than that of overseas markets at that time, and current A-share investors can expect a period of mini-bubble. Liu Jun, director of the investment department of Huatai Bai Rui Index, believes that in the future, there may be a relatively large degree of certainty that is the market environment of low interest rates. Therefore, the most likely to make money in 2022 is the stability of profitability. (Securities Times)
Commodity closing, COMEX December gold futures closed down 45.30 US dollars, or 2.4%, the largest one-day decline in more than three months; WTI January crude oil futures closed up 0.81 US dollars, or 1.06%, to 76.75 US dollars per barrel; Buren Special January crude oil futures closed up 0.81 US dollars, or 1.26%, to 79.70 US dollars per barrel.
US stocks closed: the S&P 500 index fell 0.3% to 4,682.94 points; the Dow Jones Industrial Average rose 0.1% to 35,619.25 points; the Nasdaq Composite Index fell 1.3% to 15,854.76 points; the Nasdaq 100 index fell 1.2 %, reported 16,380.98 points; Russell 2000 index fell 0.5%, reported 2331.348 points.
Preview Tuesday
| time | area | index | The former value | Predictive value |
| 16:15 | France | November Markit Manufacturing PMI Initial Value | 53.6 | 53 |
| 16:30 | Germany | November Markit Manufacturing PMI Initial Value | 57.8 | 56.7 |
| 17:00 | Eurozone | November Markit Manufacturing PMI Initial Value | 58.3 | 57.3 |
| 17:30 | U.K | November Markit Manufacturing PMI Initial Value | 57.8 | 57.3 |
| 17:30 | U.K | November Markit Service Industry PMI Initial Value | 59.1 | 58.5 |
| 22:45 | America | November Markit Manufacturing PMI Initial Value | 58.4 | 59.1 |
| 05:30 AM | America | Changes in API crude oil inventories in the week ending November 19 (10,000 barrels) | 65.5 | |
| 05:30 AM | America | Changes in API gasoline inventories in the week ending November 19 (10,000 barrels) | -279.2 | |
| 05:30 AM | America | Changes in API refined oil inventories in the week ending November 19 (10,000 barrels) | 10.7 |
23:00 The Governor of the Bank of England Bailey and Deputy Governor Cunliffe are inquired by the British Parliament on the issue of the central bank's digital currency
List of major global markets
The sell-off of technology stocks in the last hour caused the U.S. stock market to close lower for the second day in a row. U.S. President Biden nominated Powell for re-election as the chairman of the Federal Reserve. The S&P 500 index fell in the last hour before the close, and the Nasdaq 100 index fell more than 1%. The S&P 500 index maintained its upward trend for most of the session, but technology stocks favored by hedge funds were sold off, dragging the stock index below the previous close.
Biden had been swaying between Powell and Brainard before and finally decided to nominate Brainard as the vice chairman of the Federal Reserve. The US consumer price index has risen to its highest level in decades, and inflation expectations have risen to its highest level since 2013. More and more people worry that the Fed may lose its initiative in curbing inflation.
CIBC Private Wealth Management Chief Investment Officer David Donabedian said that in fact this decision did not change anything. The problem is still the same, that is, the Fed's judgment that inflation is only temporary is incorrect. If it is incorrect, how do they plan to respond? Choosing to re-elect Powell is entirely a consideration of policy continuity. Powell, who was nominated for re-election, had no worries about the Fed or more easily showed a hawkish stance.
Precious metals and crude oil
The price of gold fell more than 2% on Monday, and spot gold hit a new low since November 5 to $1802.41 per ounce. After Biden nominated Powell for re-election as the chairman of the Federal Reserve, the U.S. dollar rose sharply, sparking expectations that the Fed may insist on reducing economic support.
Kitco Metals senior analyst Jim Wyckoff said that gold has been sold because the market believes that, contrary to the nomination of Brainard, the Fed may maintain its current monetary policy line. He added that the nomination of Brainard would be seen as paving the way for a more dovish policy. This is just a knee-jerk reaction from the gold market. The dollar rose to its highest level since July last year. Powell's nomination for re-election also led to a jump in U.S. bond yields.
The money market now expects that the Fed will raise interest rates by 25 basis points by June next year, instead of July as previously expected.
Fed policymakers are debating whether to withdraw support more quickly to deal with inflation. Earlier, Fed Vice Chairman Clarida made a comment, implying that the central bank will discuss the idea of accelerating the reduction of asset purchases at the upcoming December meeting.
Oil prices fluctuated higher, and the market speculated that if the United States coordinated with other countries to release crude oil reserves, OPEC and its allies might not increase supply to the market as planned.
If oil-consuming countries jointly release oil reserves, OPEC+ oil-producing countries may adjust its production increase plan; OPEC+ representatives said that when the organization meets next week, the original moderate production increase plan may now need to be reassessed.
According to people familiar with the matter, US President Biden is preparing to announce plans to release strategic oil reserves in conjunction with several other countries as early as Tuesday. These countries may include India, Japan and South Korea. This move will be an unprecedented move by major oil-consuming countries to curb energy prices soaring. .
John Kilduff, the founding partner of Again Capital LLC, said that the battle line has been opened. Of course, OPEC and Saudi Arabia can win because all the cards are in their hands. They can reduce the supply so that it exceeds the scale of countries releasing strategic oil reserves. If WTI falls below $70, then I expect OPEC+ to respond; OPEC+ led by Saudi Arabia and Russia will meet next week to discuss plans to increase production by 400,000 barrels per day in December.
Foreign exchange
The dollar index rose 0.55% to 96.51, the highest since July 2020. Joe Manimbo, senior market analyst at Western Union Business Solutions, said that Powell's re-election nomination shows that the outlook for monetary policy is not as dovish as if under Brainard's leadership. It seems that under Powell's leadership, there is more room for interest rate hikes in the United States. Powell continues to serve as the chairman of the Federal Reserve, which is generally positive for the dollar.
The euro fell to its lowest level against the US dollar since July 2020 as the market considered the risk of further blockades in Europe due to the resurgence of the epidemic. The euro fell 0.47% to 1.1237 against the dollar. Profit-taking before the Thanksgiving holiday in the United States eased the decline; 1.12 option barriers may provide further support.
Concerns about Europe’s new restrictive measures intensified, Austria entered another complete blockade, and Germany also considered following suit, which also dragged down the euro.
Manimbo said that this is to some extent a combined blow to the euro. One is the surge in new cases throughout the Eurozone, which has strengthened the outlook for the European Central Bank’s policy to be absolutely dovish. It is in sharp contrast with the Federal Reserve, which is facing increasing pressure to speed up the normalization of its policies.
The dollar rose 0.78% against the safe-haven yen to 114.88, approaching the four-and-a-half-year high of 114.97 touched on November 17.
Mike Schumacher, Zachary Griffiths, and Erik Nelson of Wells Fargo Securities wrote in a report that this rapid response is not good for inflationary assets. The dollar generally strengthened, but the yen fell the most after the announcement. The direction of the market trend is intuitive and in line with our expectations, but we expect the market to calm down in the next one or two days.
The pound fell 0.40% to 1.3397 against the US dollar, risk aversion enveloped the market, the pound fell against the US dollar earlier, because the Bank of England policymakers' remarks raised questions about the certainty of interest rate hikes in December.
The U.S. dollar rose 0.47% against the Canadian dollar, hitting a seven-week high of 1.2705. Scotiabank analysts said in a report on Friday that, given that more lockdown measures may be announced in the coming days and weeks, risk-sensitive currencies such as the Canadian dollar may be on the defensive, while falling oil prices will Bring additional drag.
The New Zealand dollar fell 0.69% to 0.6958 against the US dollar; the Reserve Bank of New Zealand is expected to raise interest rates for the second consecutive month, and hinted that in the case of labor shortages, it will adopt a more aggressive tightening cycle to curb inflation.
International news
[On November 22, local time, US President Biden announced that he would nominate the current Federal Reserve Chairman Jerome Powell for re-election. Subsequent nomination will be submitted to the Senate for confirmation]
[Fed Chairman Powell: The economy is expanding at the fastest pace in many years. Looking forward to working closely with Brainard. Economic growth is expected to bring maximum employment. Tools will be used to prevent deep-rooted inflation]
[US Treasury Secretary Yellen: Indeed, we must worry about US inflation. I am very pleased with Biden's selection of personnel for the chairman and vice chairman of the Fed. I believe their nomination will be widely supported by Capitol Hill]
[Powell, who has been nominated for re-election, has no worries, the Fed is more likely to show a hawkish stance] With the nomination of the Fed chairman’s nomination settled, the simple fact is that the Fed may become slightly more hawkish, which will give the short-term interest rate market more control. Bet to add fuel to the fire. There has been a significant repricing in the market, largely related to the fact that Brainard, the unselected candidate, is considered to be less inclined to tighten monetary policy than the current Jerome Powell. In addition, Powell, who has no re-election concerns, may act more freely and implement the less expansive policies necessary in the eyes of observers. Mark Cabana, director of US interest rate strategy at Bank of America, believes that Powell's door to a more hawkish stance may be open.
[Iranian Ministry of Foreign Affairs: The window to return to the Iranian nuclear agreement will not be open to the United States forever] Iran’s Ministry of Foreign Affairs spokesman Khatibzad said at a regular press conference on November 22 that Iran hopes to be held later this month. The restart of the Iranian nuclear talks in the Austrian capital Vienna can reach a "pragmatic and comprehensive agreement" on the lifting of sanctions against Iran. If the Iran nuclear agreement cannot bring specific economic benefits to Iran or help Iran to normalize its foreign trade, "the United States should know that this window will not open forever."
Domestic news
[LPR has remained flat for 19 consecutive months: It is unlikely that the MLF interest rate will be lowered during the year] Wang Qing, chief macro analyst at Oriental Jincheng, said that since the second half of the year, LPR quotations have remained stable, showing that monetary policy has adhered to a stable and important tone and focused on passing Structural policy tools such as small re-lending and carbon emission reduction support tools are directed to increase support for weak links in the national economy and promote structural reforms under the background of controllable economic downward pressure. (Securities Daily)
[Public offering big guys look forward to next year's market and are most likely to make stable and profitable money] Cheng Xi, senior fund manager of E Fund, believes that mobile phones, the Internet, and smart home appliances in the later stages of growth can be configured in accordance with the logic of consumer stocks. Electric vehicles and photovoltaics, including the downstream applications of 5G, which are in the early stages of growth, are now the core of scientific and technological profits and income, and are the focus of the fund's attention. In addition, there are strong expectations and explosive possibilities for chips and new materials. China's management of liquidity and capital market is much stricter than that of overseas markets at that time, and current A-share investors can expect a period of mini-bubble. Liu Jun, director of the investment department of Huatai Bai Rui Index, believes that in the future, there may be a relatively large degree of certainty that is the market environment of low interest rates. Therefore, the most likely to make money in 2022 is the stability of profitability. (Securities Times)
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