SMM Network News: vigilance! A wave of monetary easing by central banks around the world, with four central banks cutting interest rates in one day, Trump said the US military shot down Iranian drones and the Gulf was treacherous.
There has been a flood of monetary easing by central banks around the world, with four central banks cutting interest rates in one day. Against the backdrop of the complicated and confusing global economic and trade situation, the four central banks that announced the interest rate resolution on July 18, the Bank of Korea, the Bank of Indonesia, the Bank of South Africa, and the Bank of Ukraine have all joined the "interest rate cut Club" of the global central bank.
With rising expectations of the Fed cutting interest rates, more and more emerging market countries are following suit. Other central banks in emerging markets that have cut interest rates so far this year include central banks in Egypt, Kyrgyzstan, Georgia, Jamaica, Azerbaijan, Nigeria, Ukraine and Paraguay. The Institute of International Finance (IIF) and the Bank for International Settlements (BIS) warned of the risks of a global return to excessive easing.
Affected by the basic elimination of the impact of Tropical Storm Barry on oil and gas production in the Gulf of Mexico and the news that the United States may launch peace talks with Iran, international oil prices opened low on the 18th and fell significantly in early trading. However, US President Trump said on the evening of the 18th that a US warship had "destroyed" an Iranian drone in the Strait of Hormuz, which escalated tensions again in the Gulf and raised short-term crude oil trading at the end of the day. By the end of the day, light crude for August delivery on the New York Mercantile Exchange was down $1.48, or 2.61%, at $55.30 a barrel. On the same day, London Brent crude for September delivery fell $1.73, or 2.72%, to $61.93 a barrel.
It is worth noting that LME nickel continued to rise 3.98% last night, but the price of basic metals fluctuated due to differences in fundamentals.
South Korea, Indonesia, South Africa and Ukraine join "interest rate cut Club"
On the morning of July 18, the Bank of Korea announced that it would cut its benchmark interest rate by 25 basis points to 1.5%, the first time the Bank of Korea has cut interest rates since September 2016. Only 10 of the 25 analysts surveyed by Bloomberg expected the result.
South Korean exports have fallen for the seventh month in a row and inflation has remained weak, affected by a deteriorating global trading environment and recent trade disputes with Japan.
The rate cut is a rate cut by the Bank of Korea less than a year after it raised interest rates. South Korea only raised interest rates in November, when countries such as South Korea had to raise interest rates in order to push up borrowing costs during the Fed's rate hike cycle.
On the afternoon of the 18th, the Bank of Indonesia cut interest rates for the first time since September 2017, followed by the Central Bank of Ukraine, which also announced that it would cut its main interest rate to 17%. In the evening, the central bank announced that members of the monetary policy committee had agreed to cut the key lending rate by another 25 basis points to 6.5 per cent. This is the first time the Bank of South Africa has cut interest rates since March last year. As a result, the central bank has become the latest central bank to take monetary easing because of concerns about growth prospects at home and abroad.
Lesetja Kganyago, governor of the Bank of South Africa, said the rate cut was a decision made in a "continuously uncertain environment" for the South African economy. After the meeting, the central bank cut its forecast for domestic GDP growth this year to 0.6 per cent from 1 per cent.
Can the Fed cut interest rates this month?
In the early hours of July 19, Williams (John Williams), chairman of the New York Fed, the No. 3 figure in the Federal Reserve, said recently that central bankers need to act quickly and forcefully when interest rates are low and economic growth slows. Mr Williams said neutral interest rates in the US were now expected to be around 0.5 per cent, meaning the Fed still had plenty of room to act. The Federal Open Market Committee (FOMC) (FOMC) is expected to cut interest rates at its July 30-31 meeting. Officials are concerned about the spillover effects of persistently low inflation and a global economic slowdown.
At the end of the month, the Fed will hold its regular monetary policy meeting in July, and markets are expected to announce a rate cut this time. If the boots hit the ground, it would be the Fed's first interest rate cut in a decade!
According to CME "Fed observation": the probability of the Fed cutting interest rates by 25 basis points to 2.00% 2.25% in July is 69.0%, and the probability of cutting interest rates by 50 basis points is 31.0%. The probability of cutting interest rates by 25 basis points to 2.00% to 2.25% in September is 47.7%, and the probability of cutting interest rates by 50 basis points and 75 basis points is 42.7% and 9.6%, respectively.
Driven by expectations of a cut in interest rates and a rise in risk aversion, gold prices in New York continued to rise on the 18th, setting a new six-year high.
August gold, the most actively traded gold futures market on the New York Mercantile Exchange, rose 4.80 cents, or 0.34 percent, to close at $1428.1 an ounce on the 18th from the previous day.
"the Fed is widely expected to cut interest rates by 25 basis points at a meeting of the Federal Open Market Committee at the end of July, which is the main driver of the recent rise in gold prices, which, if not achieved, will fall rapidly," said gold miner (GoldMining Inc.) Executive Vice President Jeff Wright said.
Ray Dalio, founder of Bridge Water, the world's largest hedge fund, said in an article on LinkedIn on the 17th that global investors put too much emphasis on stocks and other assets with similar returns, but that the returns on such assets are declining, which will damage them when they "paradigm switch" (paradigm shift) in global investments. Ray Dalio reiterated that gold would be the top investment choice after the next "paradigm shift".
Hussein Sayed, chief market strategist at FXTM, expressed a similar view. "while many investors do not see gold as an asset class because it does not offer any yields, gold is indeed necessary for portfolio diversification, especially when bonds in advanced economies no longer offer reasonable returns."
U. S. President Donald Trump said 18, a U. S. warship in the Strait of Hormuz "destroyed" an Iranian drone. The news heightened risk aversion in the market, with gold futures rising again in subsequent electronic trading.
On the same day, silver for September delivery rose 22.70 cents, or 1.42 percent, to close at $16.198 an ounce, while platinum for October delivery rose 2.80 cents, or 0.33 percent, to $849.9 an ounce.
Trump: us military shoots down Iranian drone
Us President Donald Trump said last Thursday that a US warship had "destroyed" an Iranian drone in the Strait of Hormuz. "the boxers took defensive action against an Iranian drone that flew up close, about 1000 yards away, ignoring repeated calls to step back and threatening the safety of the ship and crew," Trump said. " Iran's drones were "destroyed immediately".
Trump also called for "other countries to protect their ships because they will sail directly and cooperate with us in the future." This has once again strained the situation in the United States and Iraq, which has just eased. Earlier, Iran said that if the United States is willing to permanently lift sanctions against Iran, Iran will formally and permanently accept enhanced regulation of its nuclear program.
After the news, the United States and Brazzaville oil rose in the short term, WTI crude oil rebounded by $0.60 in the short term, Brent crude oil rose by $0.70 in the short term.
By the end of the day, light crude for August delivery on the New York Mercantile Exchange was down $1.48, or 2.61%, at $55.30 a barrel. On the same day, London Brent crude for September delivery fell $1.73, or 2.72%, to $61.93 a barrel.
Nickel rose nearly 4 per cent in LME
The international nickel research group said on the 18th that the global nickel market supply gap widened to 12500 tons in May, compared with a revised gap of 7500 tons in April. Nickel inventories have fallen 43 per cent in the past 12 months to their lowest level since January 2013. Driven by continued technical buying, and inventories on the London Metal Exchange at a nearly seven-year low, three-month nickel prices continued to lead the day, closing just below $15000 a tonne, up nearly 4 per cent. Intraday volatility was high, reaching a low of $14300 a tonne and a high of $15115 a tonne, with an amplitude of more than 5 per cent, the highest trading volume since April 2018.
China's largest copper smelter today cut refining costs by 24.7% in the third quarter. Copper production in Zambia, Africa's second-largest copper producer, fell 4 per cent in the first half of this year. London Metal Exchange three-month copper prices closed down slightly on the same day.
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