SMM: at 2: 00 a.m. on Thursday in Beijing, the last meeting of the Federal Reserve Open Market Committee before the US presidential election ended. As expected by the market, the federal funds rate will remain unchanged at 0%, the excess reserve ratio (IOER) will remain unchanged at 0.1%, and the discount rate will remain unchanged at 0.25%. According to the Fed bitmap, members expect interest rates to remain on hold until the end of 2023, with the unemployment rate falling to 7.6% by the end of the year, inflation expected to reach 1.2% by the end of the year, and not likely to return to the 2% set by the Fed until 2023.
In view of the relatively optimistic rebound in the US economy some time ago, the Fed raised its economic forecast for 2020 to 3.7 per cent from a contraction of 6.5 per cent in June; the economy is expected to grow by 4 per cent and 3 per cent respectively from 2021 to 2022.
According to the latest inventory report released by EIA, US crude oil inventories fell 0.9 per cent last week by 4.389 million barrels to 496 million barrels. Last week, domestic crude oil production in the United States increased by 900000 barrels to 10.9 million barrels per day. Due to an unexpected sharp decline in crude oil stocks, the decline in crude oil production in the Gulf of Mexico caused by hurricanes worsened, and international oil prices rose sharply.
The dust has settled at the last meeting before the US election. The interest rate remains unchanged at 0% and 0.25%, in line with market expectations.
The Fed said in a statement that the Fed committee aims to maximize employment and the 2% inflation target over the longer term and expects to maintain current interest rates until the labor market meets the full employment assessment. Inflation has risen to 2% and is expected to exceed that level for some time.
Notably, the Fed bitmap shows that all Fed officials expect interest rates to remain unchanged in 2020-2021. With the exception of two people who expect interest rates to be higher than current levels in 2022, other officials expect interest rates to remain unchanged in 2022. All but four officials expect interest rates to remain at current levels in 2023. This is the first time that the Fed has released a three-year interest rate forecast in its official forecast.
In addition, the Fed reiterated in its statement that novel coronavirus poses a considerable risk to the US economy. The path of economic development will depend to a large extent on novel coronavirus's communication process, the statement said. The ongoing public health crisis will continue to put pressure on economic activity, employment and inflation in the short term and pose considerable risks to economic prospects in the medium term.
At a subsequent news conference, Federal Reserve Chairman Colin Powell said that the US economy has recovered faster than expected in the past two months, but it is not certain whether this situation will continue. At present, household spending has returned to the previous decline of 3x4, but overall economic activity is still below the pre-epidemic level, although the recovery is faster than expected, but the unemployment rate is still high and there are millions of unemployed people. it is clear that the US labour market is far from full employment.
Powell also said that inflation is allowed to exceed 2% for a period of time, weakening demand in industries affected by the epidemic has pulled down consumer prices, and inflation is below the Fed's target.
"the Fed is far from running out of ammunition and is still committed to using all its tools." Powell said that if there is a risk of hindering the Fed from achieving its goals, the Fed is prepared to adjust its monetary policy position appropriately and is prepared to adjust its asset purchases as needed.
He said that parts of the United States will continue to struggle before the COVID-19 vaccine is put on the market. The Fed is studying some of the problems with (MSLP), the lending program for ordinary companies (as opposed to large Wall Street banking institutions and large companies), and will make some adjustments to MSLP to try to make MSLP more accessible to ordinary companies. Powell pointed out that regulation is still the main factor in maintaining financial stability, and the Fed's bond purchases support market stability, but do not believe that there is a close relationship between QE and financial stability.
In its new economy forecasts, released in conjunction with the Fed's latest policy statement, the Fed expects US GDP growth to shrink by 3.7 per cent this year, an improvement from the 6.5 per cent contraction expected in June. The unemployment rate will continue to fall, with the median unemployment rate expected to reach 7.6% by the end of 2020, and the unemployment rate is improving faster than officials predicted in June.
The Fed has also raised inflation expectations across the board in its economic forecasts for the next two years, and expects core PCE to reach 2 per cent by 2023, but not more than 2 per cent. Specifically, the median PCE inflation expectation is 1.2 per cent at the end of 2020, compared with 0.8 per cent in June, 1.7 per cent at the end of 2021 and 1.6 per cent in June, and 1.5 per cent at the end of 2020 and 1.0 per cent in June. Core PCE inflation expectations at the end of 2021 are 1.7 per cent and 1.5 per cent respectively.
After the announcement of the Fed's interest rate decision, short-term volatility in financial markets intensified. The dollar index fell short-term to 92.85, then jumped sharply to 93.18 before falling back from its high again. By the early morning close, the Dow was up 0.14%, the Nasdaq was down 1.25%, and the S & P 500 was down 0.46%.
Du Fei, a precious metals researcher at Jinrui Futures, told Futures Daily that the dollar index has rebounded in stages recently, but the room for rebound is expected to be limited. During the epidemic, US residents' tendency to save has increased, as an important driver of the US economy, consumption has weakened, the US economy has stalled, and confidence in the short-term recovery is weak. In addition, factors such as the Federal Reserve's liquidity release will also hinder the sustained rebound of the dollar index. The dollar index is difficult to break through the 93 technical range upward and is expected to remain low, continuing to support precious metals prices. After this round of adjustment, precious metals may restart the next rally. " In his view, the current US economy remains in the doldrums, US bond yields are low, the Fed intends to raise domestic inflation, real US bond yields may further fall to about-1.5%, and gold price support will continue.
Gold rises and falls
Prior to the Fed interest rate meeting, precious metal futures have maintained narrow oscillations over the past few days, and ETF positions, an indicator of speculative sentiment in gold and silver, are also hovering at high levels, and market investors are waiting for directional signals.
Spot gold rose as high as $1973.16 an ounce, its highest level since Sept. 2, after the Fed announced its latest interest rate decision, before oscillating lower. As of the early morning close, COMEX gold futures closed up 0.05 per cent at $1967.1 an ounce, hovering near a two-week high, while COMEX silver futures closed 0.47 per cent lower at $27.335 an ounce.
"A few days ago, gold fell from more than $2000 an ounce. The first wave reflects the rebound in US debt interest rates, and the second wave reflects the decline in inflation expectations under the influence of the pullback in commodities such as crude oil." Wang Jun, a senior analyst at Minmetals Economic and Trade Futures, told Futures Daily that the future market focus will be on the extent to which the US economy recovers and the Fed's guidance on nominal interest rates.
Wang Jun believes that although the Fed reiterated that easing is in line with market expectations at this interest rate meeting, on the whole, the new focus is limited and the impact on precious metals is relatively limited. "it is important to note that in the context of the current market addiction to easing, any less-than-expected monetary policy can easily trigger a correction in gold and silver."
Judging from the recent recovery of the US economy and the Fed's measures, the pace of the Fed's withdrawal from easing is likely to be earlier than the market expected. The unemployment rate in the United States is falling very fast, economic indicators such as PMI are gradually returning to pre-epidemic levels, and the Fed's balance sheet has remained unchanged at the current level for several weeks without further significant expansion. Compared with the economies of Europe and other countries, the US economy is obviously more resilient, and the US dollar, which has experienced a short-term overfall, also needs to rebound. " Wang Jun said.
Lun Copper rebounded, Lun Zinc Lunxi Si Lianyang, domestic iron ore futures fell more than 5% in intraday trading.
London base metal futures rose on Wednesday except London lead. Lun copper, aluminum and nickel wiped out some of the losses on Tuesday, while lun lead fell for two days in a row. Lun Zinc and Lunxi rose for four days in a row, both for more than a week and nearly two weeks of new highs, respectively.
Copper for LME delivery closed up $16 at $6777 per tonne, aluminum for LME ended up $6 at $1796 per tonne, nickel for LME closed up $28 at $15226 per tonne, lead for LME closed down $14 at $1894 / tonne, the lowest closing level for the last three trading days, while zinc for LME closed up $32 at $2528 / tonne, the highest closing level since Sept. 4. Tin for LME delivery closed up $66 at $18275 a tonne, the third consecutive high since Sept. 7.
It is worth noting that domestic iron ore futures fell sharply on the third day of the week and at night. Among them, the daily market fell more than 5%, the night market decline narrowed, and finally closed down 3.2%.
Baocheng futures analysis believes that strong demand and structural advantages of varieties are the main logic of strong ore prices in the early stage, but the profits of steel mills have dropped significantly under high ore prices, and the utilization rate of blast furnace capacity is at a high level, coupled with seasonal production restrictions. the favorable effect on the iron ore demand side is weakening, while the iron ore supply remains high, and the fundamentals are gradually weakening, and the future mineral price trend is easy to follow the oscillating downward trend.
The core question of ferrous metals is whether the strong expectations of terminal demand can be fulfilled. At this stage, rebar presents a pattern of high supply and high inventory, and the supply pressure persists, and the early expectation that terminal demand will return to a high level based on good infrastructure construction is very strong, but although terminal demand gradually rebounded after the peak season, the growth rate is significantly lower than expected. the latest weekly apparent demand for rebar has increased by only 3.76% compared with the same period last year, and the expectation of strong demand has not been realized for a long time. On the contrary, the current high inventory, only if the weekly apparent demand increases by more than 15% year-on-year, can it fall to the level of the same period last year before the winter storage. Once the demand is lower than expected, the pressure of inventory destocking will be highlighted. There is a gap between the strong expectation of the mature end and the weak reality, and the price pressure is weakened under the drive of external risk.
EIA crude oil stocks fell more than expected, and international oil prices soared by nearly 5%.
On the evening of September 17th, EIA released the latest weekly inventory data. Data show that EIA's commercial crude oil inventory excluding strategic reserves fell by 4.389 million barrels, or 0.9%, to 496 million barrels in the week ended Sept. 11, to its lowest level since April and is expected to increase by 1.27 million barrels. Us crude oil exports fell 349000 b / d to 2.595 million b / d, the third consecutive week of decline, while crude imports from Mexico fell 59 per cent to 367000 b / d, the lowest level since the week of October 18 last year. Us domestic crude oil production increased by 900000 b / d to 10.9 million b / d.
In fact, in the case of an unexpected decrease in the weekly data of US API crude oil inventories, international oil prices have risen collectively, and the domestic futures market closed up in the daytime trading session yesterday, with Nenghua plate varieties among the top gainers, of which SC crude oil closed up 3.68 per cent at 270.6 yuan per barrel, while fuel, low-sulfur fuel oil and LPG rose more than 1 per cent.
After the release of EIA data, the performance of crude oil inside and outside the market is still strong. Brent crude oil futures once broke through the $42 / barrel barrier, while WTI approached $40 / barrel. As of the early morning close, WTI crude oil closed up 5.31%. X Brent crude oil closed up 3.90%.
The strong performance of INE crude oil futures is affected by several factors: first, the short-term sell-off pressure caused by the completion of the main contract of INE crude oil on Friday came to an end; second, the crude oil warehouse receipt of the Shanghai International Energy Trading Center decreased by 2.44 million barrels last week. In addition, Asian ponds fell by more than 10 million barrels, easing the pressure on the supply side to some extent. " Yang an, a futures analyst at Haitong, told Futures Daily that from the perspective of the outer disk, after the early high decline in oil prices, most of the negative factors were digested, and the market was brewing a rebound in demand. boosted by factors such as improved inventory reports in the United States and hurricanes affecting production in Mexico, outer crude oil also rose significantly, which further stimulated the market's enthusiasm for long.
According to the United Kingdom on September 16, U. S. government regulators said that Hurricane Sally led to the closure of nearly 27% of oil production in the Gulf of Mexico. According to market news, energy consulting firm Rystad said that oil producers in the Gulf of Mexico are shutting down production and evacuating workers because of Hurricane Sally, and as much as 1 million barrels per day of production capacity may be shut down. The National Hurricane Center says the center of Hurricane Sally is slowly moving toward the border between Alabama and Florida, catastrophic and life-threatening flooding is raging in parts of the north-central coast of the Gulf of Mexico, and Tropical Storm Teddy is expected to intensify this weekend and move northwest in the middle and west of the Atlantic.
"thanks to the strength of crude oil futures, can change the plate as a whole to follow out of the rebound market, this rhythm is expected to continue in the short term." Looking ahead, Yang an believes that in addition to the weekly EIA data and the Fed's new interest rate decisions, the results of Thursday's OPEC+ September JMMC meeting need to be watched.
It is understood that the International Energy Agency (IEA) said in its monthly report that OPEC increased monthly oil production by 830000 barrels per day, led by Saudi Arabia and the United Arab Emirates. The monthly output of OPEC8 is 24.51 million barrels per day. Saudi supply increased by 500000 b / d to 8.94 million b / d, still below the August OPEC+ quota, while production in the United Arab Emirates increased by 240000 b / d to 3.11 million b / d, 520000 b / d higher than the target, and overall, the compliance rate of OPEC countries in August was 95 per cent.
"at present, the market is skeptical that OPEC can achieve a higher-than-expected production reduction statement, the loosening of the supply side urgently needs the OPEC+ United front, and the supply-side production reduction measures cannot be relaxed." Yang an said.
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