Last week ended the week of super interest rates. The actions of the three major central banks of the US Federal Reserve, the European Central Bank and the Bank of England fell short of market expectations and the rate of interest rate hike was last cut from 0.75% to 0 .5% Monetary policy has started to ease slightly. However, post-meeting statements from major central banks unanimously signaled to the market that the cycle of interest rate hikes is not over yet: US Federal Reserve Chairman Powell said that tight monetary policy can be maintained for a while of time, while the Interest rate dot chart shows that members expect the median rate to peak The number will hit 5.1%, and there is no chance to start cutting interest rates until 2024; European Central Bank President Lagarde stressed that it is expected to continue raising interest rates to a rate of 0.5%, and there is no plan to change monetary policy at the moment, and the Bank of England it also expects inflationary pressures to last longer than expected and may require further rate hikes to suppress them. The dovish and hawkish attitude not only reduces the market’s expectation to slow rate hikes, but also reignites market concerns that the economy will fall into a recession.
You will temporarily see major resistance at $85
The interest rate hike cycle may be longer than expected, which means that the pressure on the economy caused by tightening policies will continue and may even cause an economic downturn. Indeed, internal Federal Reserve Board analysts predict that the US economy will have a 50% chance of recession, and the International Monetary Fund and World Bank have even warned that aggressive interest rate hikes by global central banks will curb economic growth. body will face decline. In the face of a context of strong uncertainty, the crude oil market is also paying the price: although the Organization of the Petroleum Exporting Countries and its allies have announced that they will keep the production cut of 2 million barrels a day unchanged; The European Union has set a price ceiling for oil imports from Russia, which could ultimately decrease Russian production by about 1 million barrels per day, and the level of supply appears to have been significantly reduced or will be reduced. However, international oil prices continue New York oil futures even dipped below the all-important $76 mark, at one point even reaching $70, a new one-year low. It can be seen that, regardless of the good news on the supply side, concerns about the economic downturn are still persistent, and the negative news about the contraction in demand will dominate the international oil price developments, making oil prices easy to go down but difficult to climb . New York oil futures are expected to see relatively large resistance at US$85 for now, and it is not excluded that they will test the US$65 threshold in the future market. Only when recession fears subside will oil prices oil will really stop falling and recover.
Global Market and FX Strategist, Everbright Securities International
Huang Junneng
