Market review
Although the Federal Reserve still maintains its expectation of three interest rate cuts this year, the U.S. dollar index still fluctuated higher this week. After the release of the dot plot in the early hours of Thursday morning, market bets on interest rate cuts heated up, and the U.S. dollar index accelerated its decline. However, on Thursday the Swiss National Bank unexpectedly cut interest rates, and coupled with the strong growth of the U.S. economy, the U.S. dollar index fluctuated and rose, returning to above 104 again.
Spot gold was driven by the trend of the U.S. dollar this week. After the Federal Reserve interest rate decision, it hit a maximum of $2,220.70 per ounce, setting another record high. However, it subsequently fell back under the pressure of the U.S. dollar.
In terms of international oil prices, WTI crude oil and Brent crude oil hit multi-month highs on Wednesday as Ukraine continued to attack Russian energy facilities. However, demand concerns still put pressure on oil prices, causing oil prices to fall back on Thursday and Friday.
In terms of non-U.S. currencies, the Bank of Japan raised interest rates for the first time in 17 years and exited the world's last negative interest rate policy. However, the hawkishness was insufficient and the Fed's policy still played a leading role. As a result, the U.S. dollar still recorded an overall rise against the yen this week and is currently hovering around Near 151. As the Swiss National Bank suddenly cut interest rates, contrary to market expectations, the Swiss franc fell sharply, and the U.S. dollar rose to its highest level against the Swiss franc since mid-November last year.
Major events of the week
1. Super Central Bank Week: Japan exits negative interest rates, the Fed reiterates three interest rate cuts this year
In the past week, many central banks around the world have made the latest monetary policy decisions. Among them, the most widespread ones are the Federal Reserve's reaffirmation of three interest rate cuts this year, the Bank of Japan's first interest rate increase in 17 years and exit from negative interest rates, and the Swiss National Bank's first shot at interest rate cuts in G10 countries. ”, and the Bank of England’s interest rate hike lineup was “annihilated.”
Fed: Maintains expectations for three interest rate cuts this year
On Thursday, the Federal Reserve kept the target range for the federal funds rate unchanged at 5.25-5.5% in its latest interest rate decision. The dot plot shows policymakers still expect a 75 basis point rate cut by the end of 2024.
Federal Reserve Chairman Powell said at a press conference that the policy interest rate may have reached the peak of this interest rate hike cycle. It would be appropriate to cut interest rates at some point this year, but it would take more confidence that inflation can sustainably move towards the 2% target level before taking action. . He also warned that he was prepared to keep interest rates higher for longer if necessary.
In addition, Powell also said that risks to achieving employment and inflation goals are becoming better balanced, but it is necessary to be wary of unexpected weakness in the labor market, which will also prompt an interest rate cut.
In its latest summary of economic forecasts, the Federal Reserve raised its 2024 GDP forecast from 1.4% to 2.1%, and its 2024 core PCE forecast from 2.4% to 2.6%. What is even more noteworthy is that the federal funds rate is expected to be raised from 3.6% to 3.9% in 2025, from 2.9% to 3.1% in 2026, and the long-term forecast is raised from 2.5% to 2.6%. This suggests that Fed officials believe the U.S. economy as a whole can withstand higher interest rates in the future.
As for the pace of balance sheet reduction, which is widely concerned by the market, the Fed discussed it at this meeting but did not make a final decision. Powell said that the pace of balance sheet reduction will soon be slowed, but this does not mean that the balance sheet will shrink, but it will allow the Fed to approach the final level more gradually, helping to ensure a smooth transition and reducing the possibility of stress in the money market. sex. He noted that the composition of the balance sheet will ultimately consist primarily of Treasury bonds.
Nick Timiraos, a well-known journalist known as the "New Federal Reserve News Service", wrote an article explaining that the Federal Reserve currently faces dual risks: premature easing of policy may cause inflation to take root at a level above 2%, and acting too slowly may cause the economy to rise in interest rates. Collapse under rising pressure.
Financial blog Zero Hedge analysis said that the latest dot plot is actually significantly more hawkish than the dot plot in December last year, because although it maintains the expectation of three interest rate cuts in 2024, some interest rate cuts in 2025 and beyond have been wiped out. go.
Former U.S. Treasury Secretary Lawrence Summers criticized the Federal Reserve for continuing to send signals that it is ready to cut interest rates in the coming months even though the U.S. economy is strong and inflation expectations are still too high.
Bank of Japan: Ending negative interest rates
On Tuesday, the Bank of Japan announced its latest interest rate decision, raising the benchmark interest rate from -0.1% to 0-0.1%. This is the first time Japan has raised interest rates since 2007, and the eight-year era of negative interest rates has officially ended.
In addition, the Bank of Japan also announced that it would abandon its yield curve control policy, stop purchasing ETFs and real estate trust investment funds, and will gradually reduce its purchases of commercial paper and corporate bonds in the future. However, the bank will continue to buy government bonds, and the policy statement also pointed out that loose financial conditions will continue.
The Bank of Japan's decision to abandon negative interest rates is full of symbolic meaning, but the sharp rise in the yen that investors took for granted did not happen as promised.
Bloomberg columnist analysis believes that Kazuo Ueda chose to take action during a relatively mild period in the global economy, possibly because he wanted to push interest rates a little higher so that he would have room to cut interest rates when the next economic slowdown comes without being quickly forced to return. to the level of negative interest rates, but discussions of interest rate hike cycles or interest rate "takeoff" are outrageous.
On March 21, Nikkei once again broke the news that due to the weakening of the yen, the Bank of Japan may consider the next interest rate hike in July or October. However, former senior foreign exchange official Hideo Sakakibara, known as "Mr. Yen," said there will be no further interest rate hikes this year.
He also pointed out that if the yen depreciates to the 155 to 160 range against the US dollar, the Japanese authorities may intervene. Sakakibara predicts that the yen will rise to 130 against the dollar by the end of this year or early 2025, and said that the period of deflation is over and the period of inflation is coming.
Swiss National Bank: unexpected interest rate cut
On Thursday, the Swiss National Bank unexpectedly lowered its benchmark interest rate from 1.75% to 1.5% and said it was prepared to intervene in the foreign exchange market. This is the first interest rate cut by G10 central banks since the epidemic subsided. Most economists had predicted that Swiss interest rates would remain high until June.
The SNB's move indicates that the Federal Reserve and the European Central Bank may adopt easing policies later this year, and the bank hopes to reduce the appreciation pressure on the Swiss franc by taking early action. The SNB has long been unafraid to shock investors with sudden moves, and this rate cut could add another chapter to that history.
The Swiss National Bank unexpectedly cut interest rates, causing the Swiss franc to plummet. The Swiss franc closed at its lowest level against the US dollar in more than four months and the Swiss franc against the euro also fell to an eight-month low.
The Swiss National Bank has fired the "first shot" of interest rate cuts by G10 central banks, which may have an impact on the monetary policies of other countries and may amplify the rate cuts by the Federal Reserve and the European Central Bank during the year.
Bank of England: No one supports raising interest rates anymore
On Thursday, the Bank of England voted 8-1 to keep its benchmark interest rate unchanged at 5.25% for the fifth consecutive time. Only one person supported an interest rate cut. This was also the first time that no Bank of England monetary policy member voted in favor of an interest rate increase at the Bank of England policy meeting since September 2021.
Bank of England Governor Bailey said the British economy is moving in the right direction to start cutting interest rates. He said there were further encouraging signs that inflation was falling, but said the Bank of England needed to be more certain that price pressures in the economy were fully under control. He said it's not yet to the point where we can cut interest rates, but things are moving in the right direction.
Most experts expect the Bank of England to cut interest rates in June or August at the latest. The Governor of the Bank of England recently said that the market was correct in expecting the Bank of England to cut interest rates more than once this year. He said that he is increasingly confident that inflation is moving towards the target.
2. NVIDIA launches the most powerful AI chip GB200
This week, Nvidia held its annual GPU technology conference and released Blackwell, the "world's most powerful chip." It announced that it would provide the Omniverse "computing platform" for Apple's recently launched VisionPro head display, and released the humanoid robot basic model "GR00T Project." It demonstrated a 3D blueprint for the "next generation" data center in the artificial intelligence era and announced the launch of a new 6G research platform.
Blackwell has 208 billion transistors and uses TSMC's 4nm process. Nvidia says Blackwell-based processors like the GB200 offer AI companies a huge performance upgrade, with AI performance of 20 petaflops. Blackwell is said to be priced at $30,000 to $40,000.
3. Ukraine steps up drone attacks on Russian oil refineries
Ukraine has reportedly steadily increased Russian drone strikes as technology improves. Ukrainian officials claim to have developed drones with a range of more than 1,000 kilometers and a payload capable of causing serious damage.
A source in the Ukrainian intelligence department said that so far in the Russia-Ukraine war, drones launched by the Ukrainian Security Service have successfully hit 12 Russian oil refineries, affecting at least 600,000 barrels per day of Russian production capacity.
The United States has urged Ukraine to stop attacks on Russian energy infrastructure and warned that drone attacks could push up global oil prices and trigger retaliation, according to people familiar with the matter.
4. Kimi’s traffic far exceeded expectations, triggering a conceptual rise and limit trend
The Kimi smart assistant, launched by the Dark Side of the Moon team in October 2023, has set off a trend of rising concepts this week. Since March 20, Kimi's traffic has increased far beyond expectations, resulting in abnormal SaaS customer experience. Dark Side of the Moon issued an apology. The company also announced that the Kimi smart assistant already supports 2 million words of ultra-long lossless context and is expected to launch a commercial model this year.
5. Apple was sued and its market value evaporated by 800 billion yuan overnight.
On Thursday, the U.S. Department of Justice and 16 attorneys general filed a lawsuit against Apple this week, accusing Apple of violating antitrust laws. The lawsuit accuses Apple of monopolizing the smartphone market, hurting smaller rivals and raising prices.
Apple denied the accusation and said the lawsuit could set a "dangerous precedent" and hinder the launch of new products or services. The company's stock price closed down 4% that day.
In addition, market news said that Apple is in discussions with Google to allow Google's "Gemini" model to provide artificial intelligence function support for the iPhone. It is reported that Apple has also been in contact with OpenAI.
6. During the year, 71 companies have terminated their IPOs, and 69 companies have voluntarily withdrawn.
With the implementation of various measures to strictly control the "entry gate" of IPOs, as of March 20, 71 corporate IPO projects have been terminated during the year. Among them, except for 2 companies that failed to pass the review or terminated their registration, the remaining 69 companies all voluntarily withdrew. In addition, as of March 20, there were 670 companies in the IPO queue.
7. Xu Jiayin and Xia Haijun are banned from the securities market for life
According to reports, Xu Jiayin made decisions and organized the implementation of financial fraud, and Xia Haijun organized and arranged the preparation of false financial reports. The methods were particularly egregious and the circumstances were particularly serious. The China Securities Regulatory Commission planned to ban the two from the securities market for life in accordance with the Securities Law.
8. Many public funds were subject to on-site inspection by local securities regulatory bureaus
According to reports, a number of public funds in Beijing, Shanghai, Shenzhen and other places were subject to cross-site inspections by local securities regulatory bureaus, involving business supervision, integrity construction, compliance and risk control, etc. People close to the regulator told reporters that this is a routine inspection, not a surprise inspection. This is also one of the important measures to strictly regulate the market in accordance with the law.
9. Tencent raises dividends and steps up buybacks
Tencent Holdings released its 2023 full-year financial report, recommending a dividend of HK$3.40 per share for the year ending December 31, 2023 (approximately HK$32 billion), an increase of 42%, and plans to at least double the scale of share repurchases, starting from It will increase from HK$49 billion in 2023 to over HK$100 billion in 2024.
10. EU Council approves Critical Raw Materials Act
The Critical Raw Materials Act aims to ensure that the EU has a secure and sustainable supply of critical raw materials, which mainly include rare earths, lithium, cobalt, nickel and silicon. Its main goal is to produce at least 10% of key raw materials in Europe every year, process at least 40% of key raw materials, and recycle 15% of key raw materials by 2030.
11. Li Auto lowers first-quarter delivery guidance
On March 21, Li Auto issued an announcement stating that due to lower than expected sales orders, vehicle delivery volume in the first quarter of 2024 is expected to be 76,000 to 78,000 vehicles, lower than the previous expectation of 100,000 to 103,000 vehicles. CEO Li Xiang said in an internal letter that Ideal MEGA has a rhythm problem and that all employees have a desire to focus too much on sales.
Article forwarded from: Golden Ten Data
