Due to the disappointment of investors' strong expectations for the economic work conference, market risk sentiment was significantly suppressed, most of the contracts in the domestic commodity market were across the board, and the black and energy varieties both dived from their high levels, among which **, coking coal, soda ash, glass and coke fell first, recording a different decline of 2%-5%. In addition, hot coil, rebar, iron ore and wire rod and other black chain varieties have appeared sharply.
Huawen** investment research team said that today's black market** is mainly due to four reasons:
(1) Macroeconomic policy expectations have been loosened
With the convening of the first economic work conference, the market has strong expectations for the macro policy counter-cyclical in the early stage, and the expectations have been revised after the release of the meeting. It brings periodic pressure to the entire black series.
(2) There are changes in the cost side
Recently, the import volume of Mongolian coal has risen sharply, coupled with the improvement of the resumption of production of domestic coal mines, and the tight supply and demand situation of coking coal has been alleviated. Expectations for cost support in the black series have eased.
Periodic valuation pressures have emergedRecently, the large number of black commodities has been large, and the basis of the entire black commodities has continued to be repaired, and the overall valuation pressure of the black series has increased, which needs to be digested.
(4) Selling pressure on profit-taking
This round began around October 24 with a lot of gains in the black series, especially the leading iron ore and bicoke, which rose hugely and accumulated rich profits. For example, coking coal has risen by an astonishing 36 percent this round8%, and iron ore also rose 27% in this round. With the gradual change in market expectations and the fact that valuations have been well repaired, profit taking is starting to loosen.
Looking forward to the market outlook, the investment research team of Huawen ** pointed out that the current macro policy performance is still relatively stable, the endogenous driving force of manufacturing recovery is still strong, and the infrastructure investment is still strong. After the short-term digestion pressure, it is still expected to continue.
However, although the medium and long-term are still optimistic, but the short-term adjustment is still continuing, the recent need to pay attention to the pressure of profit-taking, need to be patient and wait for the pressure to be fully released before considering the opportunity to buy low, before that, it is still necessary to pay attention to the risk of short-term bulls.
In addition, it is worth mentioning that today's lithium carbonate ** staged a trend of "pulling onions on dry land" in front of **, and the main contract fell by more than 3% from the intraday to a sharp rise of 998% of the daily limit was closed, and it only took about 15 minutes.
**The Economic Work Conference released five major signals
*The Economic Work Conference was held in Beijing on December 11-12, which comprehensively summarized the economic work in 2023, deeply analyzed the current economic situation, and deployed the economic work in 2024. During the meeting, some of the difficulties and challenges facing China were highlighted.
In response to next year's requirements, the meeting put forward the policy tone of adhering to the policy tone of seeking progress while maintaining stability, promoting stability with progress, and establishing first and then breaking down. Next year, there will be more policies that are conducive to stabilizing expectations, stabilizing growth, and stabilizing employment, and at the same time actively promoting the transformation of methods, adjusting structure, improving quality, and increasing efficiency.
According to the analysis, the policy tone is more positive, "to promote stability" means that the macroeconomic policy may be more focused on "progress", and "first establish and then break" in the policy tone, may mean that the macro economy in the process of the transformation of the old and new kinetic energy, more emphasis on the steady transition, the new kinetic energy is not "established", the old kinetic energy still needs to play a role in stabilizing the economy.
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In terms of fiscal policy, the first work conference said that it will moderately strengthen, improve quality and efficiency, adjust the structure of fiscal expenditure, and strengthen the financial guarantee of major national strategic tasks. "Moderate afterburner" means that the next fiscal policy expansion may be cautious.
In terms of monetary policy, the first economic work conference emphasized that the prudent monetary policy should be flexible, moderate, precise and effective, maintain reasonable and sufficient liquidity, and ensure that the scale of social financing and the amount of money match the economic growth and level expectations. This reflects the importance attached to the expectation of a stable level** and the efforts to boost domestic demand at low price levels.
On the other hand, the meeting particularly emphasized the active prevention and resolution of real estate market risks, emphasizing the equal treatment of real estate developers with different ownership to meet the financing needs of real estate developers, and promote the steady and healthy development of the real estate market. The move shows the determination to resolve real estate risks and highlights the work of advancing key areas such as affordable housing construction.
On the whole, the ** Economic Work Conference released five clear signals, including emphasizing a prudent monetary policy, a moderately expansionary fiscal policy, promoting a new round of fiscal and taxation system reform, actively preventing and resolving real estate risks, and a steady transition in the transformation of old and new kinetic energy. These signals highlight the policy orientation and response strategies of the top management in the current economic situation.
Blockbuster event: Focus on the Federal Reserve's interest rate meeting
The Federal Reserve (Fed) will announce this week's interest rate decision and the latest economic projections at 3 a.m. Beijing time on December 14, which is the last monetary policy meeting of the year. Traders are now betting that the rate hike cycle has reached the point in time when the window to close is reached, but it is not yet the moment to declare a victory over inflation, while slightly trimming expectations for rate cuts next year.
The Federal Open Market Committee (FOMC)** will have little chance of casting a vote in favor of raising interest rates this week. Bank of America economist Michael Gapen said, "This will be the third time the Fed has held its ground." In our view, this means that the Fed may consider the rate hike cycle to be over. ”
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Fed Chairman Jerome Powell warned investors after the November meeting that progress on inflation returning to the 2% target would be "bumpy", as evidenced by the release of the Consumer Price Index (CPI) on Tuesday: the November CPI warmed up slightly, but it was broadly in line with market expectations, and core inflation was particularly tenacious, which the Fed sees as the last "mile" to fight inflation.
"This inflation report is a bit of a 'sentiment suppressor' and there is no sign of a clear cooling in inflation at the moment, so it does not allow the market to consolidate or find a reasonable reason for a rate cut, and the labor market remains resilient," said Seema Shah of Principal Asset Management. Powell should try to downplay the market's view of a rate cut. ”
Shaun Osborne, chief monetary strategist at Scotiabank, said, "Once we dig deeper into the data, we see that some of the underlying data is sticky, especially super-core inflation. Overall, we have seen enough progress in inflation to consider a rate cut as a next step, but the focus for now is timing. These data suggest that we must see further progress on some fundamental indicators before we cut rates before the Fed is comfortable cutting rates. ”
Looking ahead to next year, Bank of America's Michael Gapen believes that while the Fed may retain room to raise interest rates once inflation accelerates, it expects the economy to cool down and the main line of the market in 2024 should shift to rate cuts rather than rate hikes. Such a move to cut interest rates may be expressed in a subtle way.
In addition to announcing the interest rate decision, the Fed will also update the ** on economic growth, inflation and unemployment, and half an hour later (3:30) Fed Chairman Powell will hold a post-meeting press conference, which is expected to cause market turmoil if the speech releases a hawkish signal.
At present, the market is almost certain that the Fed will announce that it will maintain the benchmark interest rate at 525%-5.The 50% range remains unchanged, and the assessment of the labor market, inflation, real estate, and overall economic growth may also be fine-tuned.
In a press conference after the meeting, Powell is likely to reiterate the content of his December 1 speech that it is still too early to speculate on when interest rates will be cut. In addition, Powell may be asked whether the Fed is willing to consider cutting interest rates if inflation continues to cool, as well as his views on financial conditions, including the recent persistence of US Treasury yields.
Economists surveyed by Bloomberg estimate that the median dot plot of interest rates will show two rate cuts next year and five more in 2025, but there is a big divergence in this one, with some estimates suggesting four rate cuts in 2024 and others not even one rate cut in 2024.