21 Dec 2022

• Last night, the three major U.S. stock indexes stopped falling for four consecutive days. Education stocks, gold stocks, and oil stocks mostly strengthened, and new energy vehicle stocks led the decline. As of the close, the Dow rose 0.28%, the Nasdaq rose 0.01%, and the S&P rose 0.1%. The yield on the 10-year U.S. Treasury bond rose 2.841% to close at 3.692%, a difference of -58 basis points compared to the yield on the two-year Treasury bond. The panic index VIX fell 4.19%, Brent crude oil closed up 0.22%, and spot gold closed up 1.7% at $1,818.03 an ounce. The U.S. dollar index continued to fall from highs and closed at 103.95.
• The total number of building permits in the United States in November recorded 1.342 million units, the lowest since June 2020, and is expected to be 1.485 million units, compared with the previous value of 1.526 million units. The total number of new housing starts in the United States in November reached an annualized rate of 1.427 million units, which was expected to be 1.40 million units and the previous value was 1.425 million units. Analysts were unsurprisingly expecting a drop in both housing starts and building permits in November after dismal homebuilder sentiment data earlier in the week, and the latest figures suggest they were right. Building permits are likely to come under more pressure ahead as homebuilders' expectations for future sales are at a 10-year low.
• The Bank of Japan kept its benchmark interest rate at a record low of -0.1% and the 10-year government bond yield target around 0%, in line with market expectations. In addition, the Bank of Japan raised the upper limit of the government bond yield target from 0.25% to 0.5%, triggering speculation that Japan is testing the waters to exit its ultra-loose monetary policy. Haruhiko Kuroda, Governor of the Bank of Japan, said in this regard that it is too early to discuss exiting (easing) policy, and the current main statement about inflation has not changed, that is, inflation has not yet (steadily) exceeded the 2% target. The implicit message is that widening the yield curve control (YCC) band is not equivalent to a rate hike, nor is it a step towards policy normalization. In the future, if the time when inflation is close to 2% is approaching, the time to exit the easing policy can be discussed.
• The Atlanta Fed's GDPNow model expects U.S. GDP to be 2.7% in the fourth quarter, compared with a previous estimate of 2.8%. U.S. Senate Majority Leader Schumer said: Democrats and Republicans have reached an agreement on a spending bill. The U.S. Congress proposed a $1.7 trillion government appropriation bill for fiscal year 2023.
• Moscow Exchange plans to stop calculating indices linked to foreign ratings from April 1, 2023, and will replace them with indices linked to national ratings in the future. Yuri Denisov, chairman of the Moscow Exchange, said that the RMB accounted for 48% of the spot and swap transactions in the Moscow Exchange foreign exchange market in November, compared with 0.2% at the beginning of the year. Germany said it would stop buying Russian oil entirely in 2023. An explosion occurred on the Urengoi-Pomary-Uzhgorod Russian gas export pipeline from West Siberia to Europe, according to local officials. Gazprom said it would use an alternative route to transport the gas. Intraday LME nickel extended its rise to more than 7%. Nornickel, Russia's largest nickel producer, had previously considered cutting nickel production by about 10% in 2023. Ukrainian President Volodymyr Zelensky is expected to visit the U.S. Capitol on Wednesday.
• Apple fell 0.05%, and will start producing Macbooks in Vietnam in mid-2023; JPMorgan Chase lowered its December iPhone sales forecast to about 70 million units, from a previous forecast of about 74 million units; raised its March 2023 iPhone sales forecast To 63 million, the previous forecast was 61 million.
• Amazon rose 0.32 percent as its cloud computing division won a five-year Navy contract worth about $723.9 million.
• Tesla fell 8.05%, and its closing stock price hit a new low since November 2020. It will officially announce its plan to build a super factory in the state of Nuevo Leon in northern Mexico as soon as this Friday, with an initial investment of US$800-100 million , the investment amount may eventually reach 10 billion U.S. dollars; according to related statements, on December 31, the U.S. Treasury Department will announce the "expected direction" of electric vehicle tax incentives. Guidance is required for critical minerals and battery components.
• Meta rose 2.28%. The completion of the acquisition of Within Unlimited will be delayed by one month. Although Meta's metaverse strategy has caused controversy, the company will still invest 20% of its costs and expenses in Reality Labs in 2023.

Sources from: Investing.com; Reuters.com

Louis Yap

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