Biden pushed the massive stimulus bill again.
Early this morning, the White House released details of Biden's $1.8 trillion "American Family Plan" on its website, including about $1 trillion in investment and $800 billion in tax cuts for American families and workers. it covers areas such as education, childcare, paid leave and sick leave. To fund the American Family Plan, Biden plans to raise the personal income tax rate of more than 600000 a year from 37 per cent to 39.6 per cent, while capital gains tax will also be raised to 39.6 per cent for families earning more than $1 million a year.
The US government is considering lifting some sanctions in exchange for Iran's return to the Iranian nuclear deal
Officials from the Biden administration and the former US administration have reportedly revealed that the Biden administration is considering coming close to fully withdrawing some of the toughest sanctions imposed on Iran during the Trump era in exchange for Iran's return to compliance with the Iran nuclear deal. As indirect talks continued in Vienna this week, US officials also broadened the option of preparing conditions for Iran, which has been demanding that the US lift all sanctions. Officials declined to say that they were considering lifting those sanctions, but stressed that they were willing to lift non-nuclear sanctions, including terrorism-related, missile-related and human rights-related sanctions, in addition to those related to the nuclear program.
Powell: inflation is only temporary. QE reduction is not considered for the time being.
In the early morning of April 29th in Beijing, the Federal Reserve issued an interest rate resolution and a policy statement that the target range of the federal funds rate (0% Mel 0.25%) would not be changed, and asset purchases remained unchanged at $120 billion a month.
It is worth noting that the Fed continues to believe that the rise in inflation is largely due to temporary factors. Although the Fed has noted that both the economy and inflation are rising, the Federal Open Market Committee has unanimously decided to keep policy unchanged. "with the progress of vaccination efforts and strong policy support, economic activity and employment indicators have been strengthened."
Federal Reserve Chairman Colin Powell said at a news conference that price increases will be short-lived and that supply chain bottlenecks that lead to higher prices will not cause the Fed to change its policy. If inflation expectations exceed 2 per cent, tools will be used to bring them down. The economic recovery is still uneven and far from complete, and now is not the time to start talking about scaling back bond purchases. Something about the stock market does reflect the market Bubble.
Powell said that improvements have been seen in the worst-affected areas of the economy and vaccination should help further return to normalcy this year. The slowdown follows a further rise in inflation to some extent, with an annual PCE rate of more than 2 per cent, and spending growth stimulating prices, which may be temporary. The temporary rise in inflation this year does not meet the criteria for raising interest rates, and it may be some time before "substantial progress" is achieved. If necessary, the Fed will do its best to support the economic recovery.
On the job market, Powell said that the unemployment rate is still high, and the unemployment rate of 6% underestimates the underemployment. We are very worried that the epidemic has left permanent scars on the job market and have not seen the level of "long-term economic trauma" that we had previously feared.
When the time is right, the Fed will gradually reduce its asset purchases. So far, we are not close to making substantial further progress. We have a brilliant employment report, but that's not enough. " Powell said.
Analysts believe that the tone of Powell's speech is partial to "doves", curbing the worries of the US Treasury bond market. Powell made it clear that there will be no need to withdraw from loose policy immediately. After the Fed announced the interest rate decision, the yield on the 10-year Treasury bond initially rose to nearly 1.66%. After Powell spoke, it began to fall, hovering around 1.61%, a drop of about 1 basis point.
Cai Yili, an analyst at Huatai Futures Precious Metals, believes that there is a good chance that Powell will still play down the impact of future upward inflation, emphasizing that inflation is temporary, as an expression that monetary policy will not be tightened according to the level of inflation any time soon. This is because last year the Fed revised its monetary policy framework to change its inflation target to the average inflation level over a certain period of time, so the Fed must convey its credibility to the market. that is, there must be clear and firm response and feedback to the new framework. At the same time, because advanced economies were pursuing the "riddle of disappearing inflation" before the crisis, Fed officials are also very cautious about whether there is real inflation in the future and need to strike a balance between early attack and ex post confirmation.
It needs to be clear that cutting QE is not a reduction in the Fed's balance sheet, so it is not entirely contractionary monetary policy in the traditional sense. Cutting QE only slows the pace of Fed asset purchases, that is, the rate of expansion, until 00:00 before the Fed stops expanding, and then chooses to raise interest rates or shrink it further as appropriate. Therefore, according to the pace and experience of the last round of monetary policy exit, the path roughly follows reducing the speed of asset purchases, stopping asset purchases, raising interest rates, and reducing the size of the balance sheet. " Cai Yili said.
As of the early morning close, COMEX June gold futures closed down 0.3% at $1773.90 an ounce. WTI June crude oil futures closed up 1.46% at $63.86 per barrel, while Brent June crude oil futures closed up 1.28% at $67.27 per barrel.
All three major indexes of US stocks closed lower, with the Dow down 0.48% at 33805.56, the S & P 500 down 0.05% at 4184.66, and the NASDAQ down 0.28% at 14051.03.
"in fact, gold prices have fluctuated and fallen since August 2020, and the short trend is very obvious on the daily chart. From a macro point of view, the recovery of the global economy in the post-epidemic era is certain, such as the massive release of water by global central banks last year, and with the continued strength of the US dollar, emerging market countries have to raise interest rates. Liquidity tightening expectations have become the focus of market attention. Although the recent rebound of the epidemic in India has some support for the gold price, under the expectation of a strong recovery in the US economy, the US dollar index and higher US bond yield oscillations have suppressed the gold price. " Huishang Futures Research Institute precious metals analyst from Shanshan said.
From Shanshan's point of view, the main logic of precious metals market trading is the game between inflation expectations and liquidity tightening expectations under economic recovery. She further explained that although the recent epidemic in India continued to rebound, the impact on precious metals was relatively small. From the point of view of the countries that have been vaccinated, the effectiveness of the vaccine is very optimistic, so the disturbance of the epidemic to the global economic recovery will be prepared to slow down. With the economic recovery and stronger demand, the accelerated repair of US service consumption in the future will lead to a rapid rise in core inflation, which will provide some support to precious metals. But expectations of tighter liquidity are also simmering, with some emerging market countries already raising interest rates.
Global crude oil demand recovers well, OPEC+ maintains its plan to increase production
On April 28, international oil prices bottomed out and rebounded. Despite the negative impact of the surge in COVID-19 cases in India and OPEC+ 's plan to increase production by 2 million b / d in May-July, the market is confident and bullish about a strong recovery in global crude oil demand in the future. SC2106, the main domestic crude oil futures contract, opened higher, rising 2.33% to close at 408 yuan per barrel.
It is understood that the OPEC+ Joint Ministerial Supervisory Committee held on Tuesday recommended that the production policy remain unchanged and that the Union of OPEC+ Oil-producing countries would gradually increase production by 2 million barrels per day from May to July. At the same time, the ministerial supervisory committee (JMMC) decided that the plenary ministerial meeting originally scheduled for this Wednesday would not be held again, and the next ministerial meeting of the OPEC+ would be held in early June. This means that it is imperative for OPEC+ to increase production in May and June.
"as a matter of fact, this OPEC+ meeting did not exceed expectations, and it has shrunk in accordance with previous market expectations in terms of scale. The overall tone is to continue the resolution of the OPEC+ meeting in early April to gradually increase production until the overall increase in production will reach 2.141 million b / d in July. The previous increases were 600000 b / d in May and 1.3 million b / d in June. The overall signal from the OPEC+ meeting is to cautiously press ahead with production production in anticipation of a recovery in demand. At the same time, it also proves OPEC+ 's determination to maintain oil prices. " Said Zhong Meiyan, research director of the Energy and Chemical Industry Department of Everbright Futures Research Institute.
Yang an, head of energy and chemical research and development in Haitong Futures, told Futures Daily that before the meeting, OPEC+ had repeatedly stressed to the market that the global demand outlook would increase by 6 million barrels per day. Due to the good momentum of crude oil demand in China and the United States, the top two largest consumers in the world, and the recovery of economic conditions in Europe after the epidemic stabilized, it gave the market confidence. It is based on the confidence that demand is improving that OPEC+ is confident that it will continue to implement the gradual increase in production plan reached at the March meeting.
In fact, OPEC+ is quite satisfied with the current recovery of the market, and with the summer oil consumption peak approaching, a moderate increase in production to offset a possible surge in oil prices is also necessary. After all, the global economy is still in a period of recovery, and if oil prices rise too high or too fast, it will draw global attention to the energy market and damage the results of OPEC+ 's current efforts. As long as oil prices run within a controllable range, it is important for OPEC+ to increase production and occupy more market share. " Zhaojin futures research fellow Yu Jiansen said.
Although OPEC+ 's increase in production was a negative factor, it contributed to the rise in oil prices after landing. In this regard, Yu Jiansen believes that increasing production is an established negative factor, but after landing, it has become empty, and short positions are bound to fall into the bag after the expectation of extensive trading, so a moderate rise is reasonable.
"more importantly, the increase in production will not be implemented until May, and the actual impact will not be apparent until mid-May or even June.If demand recovers well, the current scale of production will not even be enough, and oil prices are likely to rise further. In addition, OPEC+ clearly holds monthly meetings to assess the balance between production and market demand. This measure shows that the OPEC+ is effective for the current management and control, the core interests of the member states have been protected, and they are willing to continue to abide by the relevant rules. Therefore, the view that the increase in production is about to fall is not entirely correct, and everything can only be determined after a period of time from the real reaction of the market. " Yu Yansen said.
Yang an said that after the OPEC+ announced that it would steadily increase production in accordance with the original plan, the performance of oil prices in the night market was relatively cautious, and oil prices began to rise about two hours after the news was announced, indicating that investors made a full assessment and outlook on OPEC+ production and the negative impact of the epidemic, as well as the outlook for future demand for crude oil. In the end, more optimistic expectations prevailed, and oil prices chose to break through and rise. "the upsurge of SC crude oil yesterday afternoon can be said to be a further strengthening of market optimism. At noon, it was also reported in the market that on the 27th, an oil tanker collided with another ship in Qingdao Port, which may affect the unloading port and boost domestic market sentiment. In addition, the SC crude oil discount international oil price itself has a certain replenishment momentum, so we see oil prices rising further driven by funds." Yang an said.
It is understood that in April, the monthly reports of the three major institutions all raised their forecasts for the growth of crude oil demand in 2021. EIA raised its forecast for the growth of global crude oil demand in 2021 by 180000 b / d to 5.5 million b / d; OPEC+ raised the growth rate of oil demand in 2021 by 70, 000 b / d to 5.95 million b / d; and IEA believes that the growth rate of global crude oil demand in 2021 is 5.7 million b / d. Recently, Goldman Sachs also raised its oil demand forecast again, believing that global oil demand will grow sharply by June, rising from the current 94.5 million b / d to 99 million b / d in the third quarter of 2021. The expectation of economic recovery has supported the price of crude oil and caused the price to fluctuate strongly.
In addition, it is worth noting that the latest inventory data released by API in the morning showed that API crude oil stocks rose by 4.319 million barrels in the week ended April 23, much higher than the expected increase of 375000 barrels.
"in the past two weeks, the inventory data as a whole is bearish to the oil price, because the crude oil end has accumulated more than expected, but this time the API data are actually mixed. While the crude oil is accumulating the stock, the gasoline engine distillate at the inventory end of the refined oil is double falling, thus further verifying the power of the demand side. In addition, from the perspective of the global market, the epidemic in India has indeed added uncertainty to market demand, but in terms of China, it has also led to a rebound in exports to a certain extent, especially in the context of the transfer of orders. as a result, Chinese demand can be supported and China's export window can be extended. From January to March of 2021, China's crude oil imports increased by 9.5% compared with the same period last year, and the processing volume increased by an average of 5.8% in two years, with an average daily processing of 1.929 million tons. " Zhong Meiyan explained.
API reported that crude oil inventories exceeded expectations, which once put pressure on oil prices in the morning, but considering that refinery and gasoline stocks have declined in the report, and have entered the stage of seasonal overhaul of refineries, the overall oil inventory in the US market is still roughly balanced, so the bearish strength of this news is limited. The focus of the market is still on the prospect of the recovery of crude oil demand in the global market and the game of negative factors such as the epidemic in India. " Yang an believes that under the background of a bull market in which important industrial products such as copper and threaded steel have hit new highs in more than a decade, the current oil price appears to be "cheap", so many institutions are evaluating that the valuation of crude oil is higher than the current oil price. in this way, the downward momentum of oil prices is relatively weak, and if the epidemic in India is steadily controlled in the future, crude oil will not rule out a wave of make-up gains driven by the gradual recovery of demand.
In Kansen's view, the negative factors in the market have been there, and the positive factors have been there all the time, but they have to have a substantial impact before they will be recognized by the market. "the logic of the future of the oil market is still demand and has not changed, because supply is controllable at least this year. OPEC is committed to controlling supply, but demand is uncertain. At present, the recovery of demand is relatively good, even exceeding expectations, but the future changes in the market are still uncertain, and we still have to judge the extent to which the epidemic and demand can recover based on the actual changes in the market. it is unknown whether there will be an unexpected deterioration. Therefore, it is very difficult to simply judge the trend of oil prices in the medium and long term in the future, or it is necessary to make small-scale adjustments according to the medium-and short-term changes in the market. " He said.
With regard to the logic of oil prices in the future, Zhong Meiyan said that the factors affecting oil prices are mainly concentrated in several aspects. geopolitical conflicts in the Middle East, great power game factors, the pace of the liberalization of US sanctions on Iran, the process of macroeconomic recovery in the later stage of the epidemic, and so on. In terms of the current international form, the follow-up policy choice of OPEC+ is a cautious liberalization of supply, and the rhythm of Iran's sanctions determines the largest marginal variable on the supply side, but the macro dimension of oil price valuation is still at the median level, and there is still room to rise from this dimension.
