SMM1, 10 March: yesterday, Fed officials collectively changed pigeons, and the dollar panicked and plummeted to its lowest level since October last year. Crude oil soared by more than 4 percent, the biggest one-day increase in more than half a year, and the vision of a trade war between China and the United States also brought a touch of warmth to the market. However, China's CPI fell below 2 in December today, hitting its lowest level since September 2016, reviving fears of downward pressure on the economy, and the Sino-US trade negotiations did not release substantial good news. Today, commodity markets came under pressure again, and the black decline widened. The basic metals were volatile, and the Shanghai index also closed down 0.36%.
The collapse of the dollar was hit hard by the Federal Reserve. St. Louis Fed Chairman Brad said the Fed is considering stopping raising interest rates, more of which could lead to recession. Atlanta Fed Chairman Borstik said the Fed is already very close to neutral interest rates and that the next interest rate adjustment is likely to be up or down. Chicago Fed Chairman Evans said inflation expectations have not risen as much as they had expected in the near future, and the Fed will change its policy outlook based on the performance of the economy. Rosengren, chairman of the hawkish Boston Fed, is satisfied that the Fed is now moderately loose. If better growth forecasts are correct, the forecast at the December meeting to raise interest rates twice in 2019 may be correct. Powell, chairman of the Federal Reserve, also made dovish comments over the weekend, saying that he was "patient with policy and will change the contractionary policy if necessary." The minutes released at the most important meeting in December showed that some members supported not raising interest rates at the December meeting and should be patient with further interest rate increases.
RMB and crude oil rose sharply
Michael Arone, chief investment strategist at State Street Global Investment Advisers, said the minutes of the Fed meeting showed more reservations about raising interest rates, which should help allay investor concerns that the Fed is too aggressive. Although the decision to raise interest rates in December was unanimously adopted, some members were cautious about the timing of future rate increases. The US economy is still expanding, further confirming the Fed's concern that it is raising interest rates too quickly and should signal to the markets that the rate hike may be coming to an end. In just one day, almost all officials collectively turned pigeons, with loud pigeons, the dollar plummeted all the way, crude oil, the stock market, and the RMB rose dawdling. This morning, the RMB continued to show great power, breaking 6.8 for the first time in more than four months. There is a way out for the future of the renminbi. The surge in crude oil is expected to begin to form after the API data, the market is unanimously optimistic about the performance of EIA crude oil in the evening, and ultimately live up to expectations. Saudi Energy Minister Faleh said OPEC + 's decision to cut production reduced production by 600000 barrels a day in December. Saudi Arabia's current crude oil production is 10.2 million barrels a day, and production will be cut further in January. Tchilinguirian, head of commodity market strategy at BNP Paribas, said the oil market had a positive momentum in the new year as economic optimism returned.
CPI and PPI weaken again
China's CPI in December, announced in the morning, broke 2, with the biggest increases so far this year in mutton (12.6 per cent), eggs (12 per cent) and fuel for transport (12.6 per cent), with the biggest decline in pork. Prices have fallen 8.1% so far this year. Many people are worried that deflation is not necessary. Once we do not raise interest rates, we do not shrink the table, we cut the standard four times in 2018, and MLF alone released 2.3 trillion. Taking into account the appropriate monetary multiplier of more than 10 trillion, we have not yet cut interest rates, and we do not have to worry about money. What we should worry about now is social finance and consumption. Consumption has now become a long-standing problem. With supply exceeding demand and inventory accumulating, CPI is naturally not high, CPI is not high, and PPI is also suffering. PPI plummeted 1.6 percentage points in December. Profits of industrial enterprises above size have turned negative in November compared with the same period last year, and profits are not expected to be optimistic in December.