The Federal Reserve hinted at the end of interest rate hikes, and international oil prices and precious metals rose

Southern Finance and Economics all-media reporter Weng Rongtao and Xi Chen Xin reported from Guangzhou

This week (December 11-December 15), the Federal Reserve concluded its two-day monetary policy meeting, announced for the third time that it would keep the federal funds rate unchanged, and signaled that inflation was improving faster than expected, "opening the door" to a rate cut next year.

Affected by the Federal Reserve's news, the price of WTI crude oil futures in the United States rose 4%, domestic precious metal futures rose sharply, Shanghai gold rose 1.40% on December 14, Shanghai silver futures rose 2.82%, A-share precious metals sector rose, Shandong gold, Yintai gold and other stocks rose first.

In terms of the domestic futures market, the energy and chemical sector, crude oil fell 0.84% and fuel oil rose 1.08%, the precious metals sector fell first and then rose, Shanghai gold rose 0.10%, Shanghai silver fell 0.64%, black plate, iron ore fell 2.96%, coking coal fell 3.62%, non-ferrous metals sector, Shanghai nickel fell 1.30%, Shanghai tin rose 0.35%, Shanghai copper rose 0.93%, Shanghai zinc rose 0.70%, agricultural products sector, palm oil fell 1.64% weekly, Eggs fell by 2.25% and hogs by 0.49%.

Hot spots in the trading market

Hot spot 1: The Fed has brought multiple benefits and the effect is far better than OPEC's production cuts

During the New York session on Thursday (December 14), international oil prices rose significantly, continuing the rally of the previous trading day.

U.S. WTI crude futures rose 4% to $72.25 a barrel, back above the $70 mark for the first time in five sessions. Brent crude futures also rose 3.8% to $77.10 a barrel, also returning to $75 after a week

Two days ago, concerns about oversupply and slowing demand put a lot of pressure on oil prices. By Tuesday's close, the two oils had fallen $20 from their September highs for the year. It wasn't until yesterday that the oil market finally stopped falling and rebounded when the Federal Open Market Committee (FOMC) of the Federal Reserve released dovish voices on cooling inflation and cutting interest rates.

While the Fed's "dot plot" hinted that officials were pricing in a total of 75 basis points of rate cuts in 2024, markets were more optimistic, with traders betting on an annual rate cut of 150 basis points, twice the official one. Driven by this sentiment, both the dollar index and US Treasury yields moved significantly lower.

For oil prices, the Fed's dovish decision weighed on the dollar, making dollar-denominated commodities more attractive. The Fed meeting means that the downward trend in oil prices is over, and lower borrowing costs should weaken the dollar's exchange rate against other currencies, which in turn will boost oil prices in the physical and futures markets, writes Tamas Varga, an analyst at the PVM Petroleum Association in London.

In addition, lower central bank interest rates are expected to reduce the cost of borrowing for consumers, which in turn will boost economic growth and demand for oil in oil-consuming countries, and a weaker dollar will make oil cheaper for buyers outside the United States.

During the day, the International Energy Agency (IEA) raised its forecast for the growth of global oil demand next year, citing the improved outlook for the U.S. economy. The IEA expects global oil consumption to increase by 1.1 million b/d in 2024, up 130,000 b/d from its previous forecast. The agency also mentioned that previous OPEC+ production cuts did little to boost oil prices.

At the beginning of the month, a number of OPEC+ members announced that they would continue to voluntarily cut production in the first quarter of next year, totaling 2.2 million barrels per day, but did not stop oil prices from falling. According to the analysis, the market's reaction implies skepticism about the overall effect of the production cuts.

Hot spot 2: The pace of the flower production area has accelerated

At the beginning of this month, driven by the acquisition of Luhua Oil Factory, the market sentiment has picked up, and the main force of peanut futures has stepped out of the upward trend. However, this wave of rise is not very sustainable, and the market has fallen again in many trading days recently.

Jiang Ying, a researcher at Guolian Futures, said that there are three main reasons for the decline in peanut prices: first, on the supply side, farmers are eager to sell in advance considering that the future rain and snow weather may cause poor sales, and the psychology of reluctance to sell has been loosened, and the rhythm of the production area has accelerated; , the acquisition offer was lowered, and the bullish sentiment in the market was frustrated again.

The peak season of peanut oil consumption is generally in the Mid-Autumn Festival and the Spring Festival, about a month before the festival is the main stocking time, this year's Mid-Autumn Festival demand is not ideal, this year's Spring Festival stocking season can be "prosperous"? Hong Chenliang said that at present, the peanut oil inventory of the main oil mills is relatively safe, and farmers may have a demand for centralized cash in before the Chinese New Year, so the market at the end of the year is not very optimistic. From a longer-term perspective, the currency price of 9,000-10,000 yuan/ton is in a medium-high position in history, and the downward space and probability will still be greater in the context of oversupply.

Yang Jing, a senior analyst at Hongye Futures, believes that on the one hand, on the whole, the crushing profits of oil mills have been in a state of loss this year, and the acquisition of oil mills in a state of loss is only to meet the rigid needs of stocking in the peak season before the Spring Festival, and the possibility of large-scale acquisitions of oil mills is small. Recently, the crushing loss of oil mills has expanded, which has further inhibited the enthusiasm and demand of oil mills. Therefore, the demand in this year's peak consumption season may be significantly weaker than that of the same period in previous years, and the spot price in the early part of the Spring Festival may show a pattern of range-bound fluctuations.

On the other hand, this year's domestic peanut production increased significantly year-on-year, and the current farmers' reluctance to sell only postponed the supply of peanuts to next year's Spring Festival, after the Spring Festival is the traditional peanut consumption off-season, demand will be weaker than the previous month, and the supply pressure of farmers has risen month-on-month, after the festival in the strong supply and weak demand expectations, the spot price will still face greater downward pressure.

From the current point of view, the follow-up peanut price trend is not ideal, and upstream and downstream enterprises should take the initiative to pay attention to the market trend, flexibly use futures tools to smooth business fluctuations, and enhance risk management awareness.

Industry policy news

News 1: The Central Economic Work Conference sets the tone A prudent monetary policy should be precise and effective

On December 12, it was reported that the Central Economic Work Conference was held in Beijing. The meeting said that the prudent monetary policy should be flexible, moderate, precise and effective. Liquidity should be kept reasonably abundant, and the scale of social financing and money supply should be commensurate with the expected targets of economic growth and price levels. We should give full play to the dual functions of monetary policy tools, revitalize the stock, improve efficiency, and guide financial institutions to increase support for scientific and technological innovation, green transformation, inclusive small and micro enterprises, and digital economy. Promote the steady and moderate decline of comprehensive social financing costs. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

In this regard, Wen Bin, chief economist of Minsheng Bank, said that in terms of money supply, the Central Economic Work Conference emphasized that "the scale of social financing and money supply match the expected targets of economic growth and price levels". Compared with the statement of last year's Central Economic Work Conference, the original target of "nominal economic growth" is split into "economic growth" and "price level expected target", focusing on the important role of monetary policy in stabilizing price level expectations, and inflation may become an important factor in judging whether monetary policy is "effective" in the next stage. Since 2023, prices have continued to run at a low level, and it is expected that monetary policy is expected to be moderately strong in 2024 to promote a moderate rise in the price level.

It is worth mentioning that the term "precise and effective" appeared for the first time at the Central Economic Work Conference, but "precision" has been similarly expressed before, such as the 2020 monetary policy requirement of "flexible, precise, reasonable and moderate", the 2022 monetary policy requirement of "precise and powerful", and "effective" is recently proposed, reflecting that the follow-up will pay more attention to the effect of policy implementation and give full play to the policy synergy to dredge the transmission efficiency.

Dong Ximiao, chief researcher of Zhaolian, expects that in the next step, the central bank will comprehensively use a variety of monetary policy tools, both quantity and price, and combine long and short, to implement a sound monetary policy more accurately and effectively, continue to maintain reasonable and abundant liquidity, further stabilize the confidence and expectations of business entities, and guide financial institutions to increase the number of business entities, especially scientific and technological innovation, green transformation, inclusive small and micro enterprises, The support services of the digital economy will make greater efforts to support the continuous improvement of economic operation, help achieve the goals and tasks of economic and social development, and create a more suitable monetary and financial environment for the economy to achieve a good start and high-quality development in 2024.

News 2: The IMF Managing Director warned central banks to stick to the fight against inflation

On Friday (December 15), local time, International Monetary Fund (IMF) Managing Director Georgieva said that although the Federal Reserve hinted that it would adjust monetary policy next year, central banks around the world should not relax prematurely, but it is necessary to continue to fight inflation until prices are completely stable.

Georgieva visited South Korea this week to attend the "Korea and IMF International Seminar". "Sometimes, some countries declare victory prematurely, and then inflation becomes more entrenched and the fight against inflation becomes more difficult," she said. Don't celebrate too soon before things are done. ”

After a meeting with Bank of Korea Governor Rhee Chang-yong, Georgieva said her advice also applies to the Bank of Korea.

The Fed's interest rate dot plot released this week expects a 75 basis point rate cut in 2024, suggesting that there could be three rate cuts next year. Fed Chair Jerome Powell said that although it is too early to declare victory, it is already time to consider reducing tightening.

The abrupt U-turn of the Fed and Powell took the market by surprise. However, ECB President Christine Lagarde and Bank of England Governor Bailey both took cautious notes.

Georgieva said that the Fed was right to send a turn signal based on US data, but other central banks should consider their own situation. "Inflation is now coming down and decelerating, but it's different in different countries, and central banks have to adjust their actions according to domestic conditions," she said. ”

Nevertheless, Georgieva stressed that the fight against inflation has entered the "last mile" and advised the Bank of Korea to act on data when deciding monetary policy and not to rush it.

Looking ahead

Energy and chemical sector

Crude oil: On the supply side, the OPEC+ meeting decision was less than expected, and oil prices were depressed, although OPEC+ members emphasized production cuts, but oil prices failed to stop the decline. The latest data shows that U.S. crude oil production is high, Russian seaborne crude oil exports have increased sharply, and U.S. crude oil production and operating rates remain high, but OPEC continues to forecast a severe shortage of global oil supply in the next quarter in its monthly report. On the demand side, global oil demand has slowed significantly, and the IEA lowered its crude oil demand forecast for the current quarter, raising its global oil demand growth forecast for 2024 by 130,000 barrels per day to 1.1 million barrels per day. This week's sharp decline in crude oil inventories and the discussion of interest rate cuts at the Federal Reserve meeting supported the rebound in oil prices, and the market is optimistic about crude oil demand next year, and oil prices are expected to rebound next week. (Hehe Futures)

Black plates

Iron ore: Overall, global shipments increased in the current period, arrivals decreased month-on-month, port inventories destocked, and hot metal production continued to decline but was slightly higher than the same period in previous years. At present, with the continuous decline in hot metal production, supply and demand tend to be loose, but the drive of steel mill replenishment at the end of the year is still there, and it is expected that iron ore will maintain a high volatility trend in the short term. In the later stage, we will continue to pay attention to the changes in demand and the supply of overseas mines. (Guoxin CNI Futures)

Non-ferrous metal plates

Shanghai nickel: supply and demand are weak in the fundamental direction, and the shock is weak. In the direction of pure nickel supply, the domestic production during the year has basically been in place, and the supply of surplus during the year has remained in a state of surplus. On the demand side, the purchase price of ferronickel in steel mills continues to fall, the inventory of ferronickel is high, and the risk of accumulation of inventory still exists under the high production schedule of steel mills. The operating rate of ternary precursors downstream of the nickel sulfate end was 40%, which remained at a low level, resulting in a decrease in orders for nickel sulfate in December. Demand is weak. (Purple Celestial Wind)

Agricultural products sector

Eggs: In November, the overall stability of the laying hen inventory, mainly due to the rise in the monthly elimination of old chickens, the short-term supply is difficult to have a significant increase, a slight increase in consumption in December, and the overall spot price fell slightly. (Guotai Junan Futures)

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