SMM News: at present, the further economic recovery in Europe and the United States is weak, as the two major economies in the world, their weak recovery will be a drag on the continued improvement of the global economy. The effect of the early monetary and fiscal stimulus in the developed economies under the premise that the novel coronavirus epidemic has not been effectively controlled, the power has been exhausted, and a new round of stimulus is urgently needed. Although the recent US fiscal stimulus negotiations have been full of twists and turns, the fiscal stimulus will only be late and will not be absent. At that time, precious metals will set sail again under the influence of the anti-inflation attribute.
Over the weekend, the number of novel coronavirus cases in France increased by nearly 30, 000, making the outlook for the eurozone epidemic grim. In the absence of relevant stimulus in the United States, there are fears that the epidemic in Europe will drag down US stock markets, gold or Synchronize. Gold reached 1850 points at the key support level of the weekly line during the National Day holiday, and the probability of further dip in the short term is low. As the fiscal stimulus negotiations are not smooth, so the trend of gold is also more tangled, but a new round of rally is gaining momentum and is on its way.
I. Analysis of the economy and financial markets in Europe and the United States
The economies of Europe and the United States continued to rebound in the context of the full outbreak of the novel coronavirus epidemic on March 10 and the joint financial intervention of central banks, but judging from the recent key economic data in Europe and the United States, the economic rebound is weak and there is a risk of further decline.
In the United States, the initial PMI of ISM manufacturing industry in September was 53.5 lower than that of August 53.6, and the initial PMI of non-manufacturing industry was 54.6 lower than that of August 54.8. Both manufacturing and non-manufacturing PMI declined. The number of new non-farm payrolls after the quarterly adjustment is 661000, which is declining gradually, but it is still higher than the average of more than 200,000 before the epidemic. The unemployment rate remained at around 8.4 per cent, down slightly from 9.8 per cent during the financial crisis. The total retail sales data fell from $5.509141 trillion in July to $545.89 billion in August, with both year-on-year and month-on-month declines. the month-on-month data began to decline from June to-0.92% in August. the year-on-year figure fell from 3.62% in June to 0.12% in August. Both the leading indicators of the US economy and the Synchronize indicators show signs of slowing.
Euro zone manufacturing PMI and non-manufacturing PMI continued to pick up. Euro zone non-manufacturing PMI fell slightly in August, and non-manufacturing PMI data fell below the 50th percentile in August, which may be related to the rebound in the euro zone epidemic and increased pessimism. Manufacturing in the euro zone continues to rebound, even more than it was before the epidemic. Japan's manufacturing and service PMI also rebounded, but the rebound has not yet reached the level before the epidemic, and the recent rebound has slowed. Inflation in the eurozone is still low recently, and the euro zone's reconciled CPI has continued to decline from 1.4 per cent in January and has recently fallen to-0.3 per cent. The eurozone Monetary Management Board is considering whether to follow the Fed's monetary policy framework and abandon its inflation control target and instead focus on unemployment. From the comparison of investment returns between the euro zone and the bond market, the euro area PMI index has returned to the pre-epidemic level and far exceeded the 2019 average. With the euro zone through 750 billion investment funds, the euro zone has entered a rapid development channel, but the recent increase in the epidemic has weakened the euro zone economy. From the comparison of the yields of the US long-term bond market and the German long-term bond market, the US 10-year Treasury yield has increased, while the euro zone yield has weakened, forming a certain support for the dollar index. Similarly, compared with US and Japanese yields, US Treasury yields continued to rise, but Japanese yields remained stable, and from the yield point of view, the dollar index fell further or weakened.
II. Epidemic progress and geo-friction analysis
Recently, the novel coronavirus epidemic in Europe has risen again, and the number of new novel coronavirus cases continues to rise. The number of new novel coronavirus cases in Italy and Germany reached an all-time high in a single day. Italy, Germany, Britain, France and other countries have adopted new policies to strictly control the second wave of outbreaks. Meanwhile, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases and a top infectious disease expert, said that the positive rate of novel coronavirus tests in various parts of the United States has increased, which may mean that a rebound in cases will come soon. The epidemic in Europe and the United States is still in danger of a further rebound, which will cast a shadow over the economic recovery. Although at present, China's region and some vaccines are progressing smoothly, the market is still not sure about the effect of vaccines on controlling the epidemic, and the emergence of vaccines will certainly play a certain role in curbing the epidemic, but it can fundamentally contain the epidemic and bring rapid economic recovery, which is still difficult to determine.
China has announced that CCTV has suddenly announced a live broadcast of NBA programs, and the Internet has been fully opened up on premise, so whether there are signs of further relaxation between China and the United States remains to be seen. From October 21, the United States announced the resumption of direct flights between China and the United States, no longer stopping through Seoul. Judging from the research reports of major securities institutions, it is generally believed that there is a trend of rapprochement in relations between China and the United States or within 1-2 quarters. At present, the Taiwan issue is still an important aspect affecting Sino-US relations, which requires special attention.
III. Future investment research and judgment
The White House and Congress are deadlocked over further coronavirus-related stimulus measures, adding to pessimism across the US stock market. U.S. Treasury Secretary Nuchin said Oct. 14 that an agreement is unlikely to be reached in the coming weeks. In terms of the US monetary base, it rose another $107.029 billion in August after a quarterly adjustment, and with fiscal stimulus hanging in the balance, the market expects the Fed to further increase the money supply to maintain a weak economy. Both loose monetary policy and successful negotiations on fiscal stimulus will benefit gold.
On the European side, the arrival of the second wave of the epidemic may intensify European control measures, which in turn will deal a heavy blow to the slowly recovering economy. Both the risk aversion in the eurozone and the introduction of further stimulus in the eurozone will exacerbate the rebound in gold. On the whole, the bullish factors of gold are greater than the negative factors in the future, and it is accumulating further upward momentum. Multiple orders should be held patiently.
