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On August 20th, it was reported that the Peoples Bank of China (PBOC) had maintained zero 7-day reverse repurchase operations for seven consecutive trading days as of August 19th, drawing widespread market attention. Considering the recent liquidity operations of the PBOC, market interest rate trends, and the PBOCs regulatory approach, this author believes that the consecutive zero injections of 7-day reverse repos do not equate to tightening liquidity, but rather reflect the PBOCs refined liquidity management in response to changes in market supply and demand. From an operational perspective, the PBOC has explicitly stated in its recent open market operations announcements that the 7-day reverse repo operation volume was zero "based on the demand from primary dealers in open market operations." Therefore, the direct reason for the zero injection of 7-day reverse repos is the weakening demand from primary dealers.US President Trump: Announced the toughest economic sanctions in history against Iran, which will be an unprecedented economic war and isolation.Artificial Intelligence: 1. OpenAIs revenue reportedly increased by 18% quarter-over-quarter, but losses widened. 2. OpenAI CFO: The company will go public in 2027 or earlier. 3. Trump: Will hold a meeting with people in the field of artificial intelligence next week. 4. Microsofts Chief Marketing Officer for AI, Andrea Mallard, is reportedly leaving the company. 5. AI chip startup Fractile seeks a $6.5 billion valuation after winning an order from Anthropic. 6. Cognition CEO: Reports that SpaceX attempted to acquire Cognition are untrue. 7. OpenAI: Plans to begin rolling out private security processing in September and release a technical white paper. 8. Nvidia plans to invest in AI data labeling company Mercor, with a potential valuation of $20 billion. Integrated Circuits (Chips): 1. Samsungs chip foundry prices reportedly increased by up to 15%. 2. TSMCs advanced packaging CoWoS capacity is in short supply. 3. Competition in the AI chip market intensifies, with Japanese startups shifting their focus to advanced materials. 4. SK Hynix: Will buy 40 trillion won worth of treasury shares to reward shareholders. 5. Reports indicate that Samsung Electronics aims to be the first to complete the development of 1dnm DRAM memory by September this year. Other: 1. my country achieved its first land-based recovery of a rocket. 2. The Change-7 spacecraft and rocket assembly completed vertical transport and will be launched at an opportune time. 3. Moderna/Mercks new cancer vaccine may prevent melanoma recurrence. 4. Japanese trading company Itochu Corporation plans to build 10 data centers in Japan by 2030.On August 20th, a group of four U.S. Senate Democrats, led by Chris Van Hollen, demanded that Federal Reserve Chairman Warsh publicly disclose his conversations with Trump. This follows a Wall Street Journal report that while such calls were not recorded on Warshs schedule, the two had spoken multiple times. The senators argued that withholding information could give the impression that the White House was controlling monetary policy. Last month, Warsh did not directly respond to Van Hollens questioning. The senators demanded that Warsh provide written confirmation of any contact with Trump since taking office, or amend his schedule to disclose such calls. White House National Economic Council Director Hassett downplayed these calls in early August, stating that Trump did not pressure Warsh on interest rate decisions; Trump himself stated that he had only had one brief conversation with Warsh. In contrast, former Federal Reserve Chairman Powell meticulously documented his conversations with Trump and disclosed several face-to-face meetings.On August 20th, Canadian Prime Minister Mark Carney is pushing to end some of Canadas ban on the retail sale of U.S. alcohol, hoping to push for a finalized U.S.-Canada trade agreement. Nova Scotia Premier Tim Houston stated that Carney, during a conference call with provincial premiers on Wednesday, urged them to reinstate the sale of U.S. wine and spirits in their local stores once the agreement is finalized. In Canada, provincial governments are responsible for setting rules for the sale and distribution of alcoholic beverages. Last year, in retaliation for tariffs imposed by the Trump administration, most Canadian provinces removed U.S. alcoholic products from their shelves, leading to a significant decline in export sales for U.S. wine and spirits producers. Currently, most provinces maintain their bans on the sale of U.S. alcoholic beverages, including Canadas three most populous provinces—Ontario, Quebec, and British Columbia. It remains unclear whether the provincial premiers will agree to Carneys request. If they refuse, the preliminary U.S.-Canada trade agreement announced by Trump on Tuesday evening could be at risk. The White House considers ending these bans to be one of the core pillars of any U.S.-Canada trade agreement.

In a risk-on environment with a weaker US dollar, WTI consolidates weekly losses above $83,000

Alina Haynes

Sep 09, 2022 17:17

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The price of WTI crude oil is higher for the second day in a row while paring the weekly losses at the eight-month low on Friday during the Asian session. However, by the time of publication, the black gold has reached a new intraday high of around $83.50.

 

Recent news reports from the US Treasury Department regarding the oil price cap appear to have helped drive up energy prices together with stronger sentiment and a weaker US dollar. According to the US Treasury source, "the oil price cap should be set above the marginal production cost, taking into account past Russian oil prices."

 

In other news, stronger sentiment and slow US Treasury yields cause the US Dollar Index (DXY) to fall intraday by 0.55%, to 109.05 at the latest. It's interesting to see that after a solid day, the US 10-year Treasury yields are still stuck around 3.32%, while the S&P 500 Futures tracks Wall Street's gains at approximately 4,020.

 

Recent market sentiment appeared to be aided by remarks made by US Treasury Secretary Janet Yellen, which suggested that trade relations between the US and China were set to improve. The market's attitude also appeared to have been aided by recently stronger US statistics and expectations that global central bankers will be able to offset the shock caused by inflation with a comprehensive strategy and higher rates. The Wall Street Journal (WSJ) article, on the other hand, raises some concerns about the future of China's technological enterprises and casts some doubt on the optimism.

 

A price document examined by Reuters on Friday revealed that Kuwait has decreased the official selling prices for its oil grades for the month of October from the previous month. Before the present program ends in October, US Energy Secretary Jennifer Granholm said the administration of US President Joe Biden is considering whether additional releases of crude oil from the country's emergency stockpiles are necessary. Prior to that, a Department of Energy official reportedly told Reuters that the White House was only considering releasing the 180 million barrels from the US Strategic Petroleum Reserve (SPR) that the president had already stated.

 

It should be highlighted that the recent decline in China's inflation data, coupled with the hawkish central bank activities, presents a challenge to oil purchasers. Both China's Producer Price Index (PPI) and Consumer Price Index (CPI) show unfavorable results for August. However, compared to 2.8% market expectations and 2.7% in the prior year, the headline CPI declined to 2.5% YoY, and the PPI fell to 2.3% from 3.1% projected and 4.2% in the preceding year.


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