The rapid rise in oil prices of US$2.5 in the night session once again caught many investors off guard, and this week's high and sharp fluctuations are exactly the stage we have repeatedly reminded the market is currently in. Following the hawkish stance of the Federal Reserve on Thursday, risk assets such as stock markets and commodities fell across the board. The domestic commodity index also experienced its largest single-day decline in a month and a half. Market risk appetite cooled rapidly, which also promoted the continuous correction of oil prices. In the evening, Russia announced that it would temporarily restrict diesel and gasoline exports on September 21 to stabilize the domestic market. This increased the market's worries about the oil market, which was originally in tight supply. Oil prices got rid of the negative macroeconomic pressure. European and American diesel oil took the lead in rising, which led crude oil to recover its intraday decline and surge higher. This is in line with the large increase in copper, another important commodity. The decline formed a strong contrast.
Such performance also further confirms that the core influencing factor in the current crude oil market is tight supply. As long as the negative macroeconomic conditions do not trigger uncontrollable panic, it is difficult for oil prices to fall significantly in a sustained manner. However, the impact on risk assets at the macro level still requires attention. After the Federal Reserve's hawkish remarks, financial market risk appetite fell significantly. In the end, oil prices also failed to hold on to gains and fell back from the intraday high, closing the star line with a long shadow line, indicating that the current crude oil market is once again facing a game between tight supply and macro factors. In this situation, the differences in institutional views are also obvious. , the high and sharp fluctuations are expected to continue, so participate with caution and pay attention to the rhythm.
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Daily updates
[1] WTI's main crude oil futures closed down $0.03, or 0.03%, at $89.63/barrel; Brent's main crude oil futures closed down $0.09, or 0.1%, at $92.26/barrel; INE crude oil futures closed up 0.23% , reported 694.8 yuan.
[2] The U.S. dollar index rose 0.02% to 105.38; the dollar against the yuan on the Hong Kong Stock Exchange rose 0.08% to 7.2858; the U.S. ten-year Treasury bond fell 0.37% to 108.34; the Dow Jones Industrial Index fell 1.08% to 34070.42.
Recent news
[1] Russia temporarily restricts diesel and gasoline exports to stabilize domestic market
It is reported that the Russian government has temporarily restricted the export of diesel and gasoline to stabilize the domestic market. The actual ban on the export of gasoline and diesel oil came into effect on September 21. "The temporary restrictions will help to saturate the fuel market, thereby lowering consumer prices," the government press office said in a statement on its Telegram channel. This follows news that the Russian government is considering imposing an export tariff of US$250/metric ton on all types of petroleum products from October 1 to June 2024.
[2] The Federal Reserve’s hawkish stance has alarmed investors, but some people say interest rates are close to peaking;
① The Federal Reserve’s plan to keep interest rates high for a long time is likely to continue to weigh on stocks and bonds in the coming months, but some investors are skeptical that the Fed will follow through on the plan.
②The Federal Reserve kept interest rates unchanged on Wednesday, in line with market expectations. However, the top policymakers of the Federal Reserve have strengthened their hawkish stance, predicting further interest rate increases before the end of the year, while maintaining monetary policy tightening in 2024 to a greater extent than previously expected.
③ Broadly speaking, long-term high interest rates may be detrimental to stocks and bonds. U.S. Treasury yields (yields) have risen in recent months and have reached their highest level since 2007. If interest rates remain high, U.S. bond yields may continue to rise.
④The rise in U.S. bond yields is also detrimental to the stock market. The S&P 500 .SPX is up 15% this year, but has struggled to rise from its late July highs as U.S. Treasury yields accelerate. The S&P 500 fell 0.94% on Wednesday, while the two-year U.S. Treasury yield, which reflects interest rate expectations, hit a 17-year high.
⑤ Josh Jamner, investment strategy analyst at Clearbridge Investments, said, "The possible range of interest rate cuts has become wider, which brings the possibility of intensified market volatility before the end of the year."
⑥ However, at least some market participants do not seem to believe that the Fed will resolutely keep interest rates high, although since the Fed started raising interest rates in March 2022, bets that underestimated the Fed's hawkishness have mostly ended in losses. The interest rate futures market late Wednesday showed traders betting that the Federal Reserve will cut interest rates by a total of nearly 60 basis points next year, bringing rates to about 4.8%. That compares with the Fed's latest quarterly forecast of 5.1%.
⑦ "It looks like the Fed is trying to send as hawkish a signal as possible. It's just a matter of whether the market will listen," said Gennadiy Goldberg, head of U.S. interest rate strategy at TD Securities. "If the economy starts to soften, I don't think these dot plot predictions will actually materialize."
⑧ David Norris, head of U.S. credit at TwentyFour Asset Management, said, "Inflation is moving in the right direction, but... economic growth faces many headwinds."
⑨ John Madziyire, senior portfolio manager and head of U.S. Treasuries and TIPS at Vanguard Fixed Income Group, believes that bond yields are close to their peak and look "super attractive." "I don't think there's a lot of room for yields to rise, so as a long-term investor ... you should add more duration risk at these levels and use any sell-off to actually increase duration risk," he said.
[3] Summary of investment banks’ views on oil prices:
1. Goldman Sachs: raised its Brent crude oil price forecast to US$100/barrel in the next 12 months, compared with the previous forecast of US$93/barrel.
2. UBS: It is expected that oil prices will not continue to exceed US$100 in the next 12 months.
3. ANZ Bank: Oil prices are expected to exceed US$100 within the year. 11. JPMorgan Chase:
4. JPMorgan Chase: The rising momentum of crude oil prices may have peaked. It was previously judged that oil supply cuts are "not over yet," which may lead to oil prices as high as $120 per barrel and bring the global economy to a standstill. At the same time, it pointed out, “If our forecast for crude oil prices to fall back to US$86/barrel next quarter comes true, the impact of the oil crisis may fade quickly.
5. Citigroup said oil prices should ease due to increased supply from countries other than OPEC+ leaders Saudi Arabia and Russia. Analysts including Ed Morse wrote in a note that while technical traders and geopolitical risks could push oil prices above $100 in the short term, additional supply means "$90 prices look unsustainable." ".