Global Overview
S&P Announces Digital Cryptocurrency Index for Next Year
Yesterday, Dow Jones Indices, a division of Standard & Poor’s Global, announced the launch of a digital cryptocurrency index next year, the first major financial firm to enter this emerging asset class. S&P will use data from New York-based virtual currency company Luca, and S&P clients will be able to work with Luca to create custom indices and other benchmarking tools for digital cryptocurrencies. It’s worth noting that Bitcoin has been on a tear in recent days, and S&P’s move will help digital cryptocurrencies become a more mainstream investment.
Pfizer Vaccine Faces Supply Chain Issues, Production Halved
In addition, due to supply chain hurdles, Pfizer shipped only half of its initially planned dose of Neocrown vaccine this year, and its clinical trial results came later than initially forecast. In particular, the company expects to deliver only 50 million doses of vaccine at the end of the month, compared to its original 100 million dose schedule, after discovering that some early batches of raw materials failed to meet standards.
U.S. to File Antitrust Suit Against Facebook
The company has been in the process of developing a new product that will be available in the marketplace for more than a year, and it is expected that the new product will be available in the next few months.
Market Review]
OPEC+ reaches agreement on small production increases. Yesterday, OPEC+ reached an agreement to gradually ease production cuts next year. The oil-producing countries agreed to increase production slightly in January and raise output by 500,000 barrels per day next month, lowering the emergency production cut agreement slightly from 7.7 million barrels per day to 7.2 million barrels per day. They also said they might increase production in February and March, but said they would do so only if the market could handle the extra production. Estimates based on OPEC data show that the revised agreement will likely keep the oil market in a state of supply shortage through the first quarter of next year. On this news, US oil moved above $45. The next thing we need to watch out for is that OPEC+JMMC will hold its last meeting of the year on December 19, with the aim of assessing the oil market situation at the end of the year. Among the factors we need to keep an eye on in recent days is the drilling data to be released at 2am on Saturday. In recent months, the number of wells drilled in the United States has been gradually rising again, last week it was 241, and the market expects it to increase to 246 this week. If the release is larger than expected, oil prices may come under pressure. In addition, the market is also turning its attention to the economic stimulus negotiations in the United States.
The US bipartisan negotiations on the stimulus package resumed. To prevent a government shutdown, U.S. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell spoke on Thursday for the first time since the November election. The two congressional leaders discussed their “shared commitment to completing comprehensive spending and anti-pandemic relief measures as soon as possible,” according to Pelosi spokesman John H. Hamill, and both sides said they hope to resolve the two thorny issues before the Dec. 11 deadline for the government to run out of money. Previously, Pelosi and Senate Minority Leader Chuck Schumer were prepared to accept a $908 billion bipartisan proposal as a starting point for negotiations with McConnell. McConnell, however, had previously rejected the proposal, offering his own plan of about $500 billion. While there is still no bipartisan agreement on anything substantive, the market’s optimism for a resumption of negotiations is enough to depress the dollar. On top of that, recent optimistic news on vaccines and the recovery of the Asian economy have boosted investor bets on a global recovery, and investor demand for the dollar has fallen, leading to dollar weakness. Wall Streeters are warning that the dollar will go through a bear cycle as the Federal Reserve has kept interest rates low for years. Fed Chairman Jerome Powell said on Wednesday that the Fed will keep its interest rate policy low, which will continue to pressure the dollar.
Gold prices climbed sharply this week. The continued weakness of the dollar and rising hopes that the U.S. Congress is on the verge of breaking the impasse in fiscal stimulus negotiations from both parties have provided support for the precious metal. In addition, the latest data released by the World Gold Council showed that central banks resumed gold purchases in October after two consecutive months of net selling. This is also good for gold. Gold prices saw a big rally this week, climbing from a low of $1,764.57 an ounce all the way to around $1,840.
Silver surged and then entered a sideways session. Gold was sharply higher, and silver was no exception. Prior to Wednesday, silver’s rally was ferocious, up nearly 9%. However, after reaching a high of $24.3, silver went into sideways consolidation.
The euro is at a two-and-a-half-year high. Let’s turn our attention to non-US currencies. The dollar continues to weaken, and in response, European currencies have rebounded sharply. The euro continued to rise against the dollar, surging more than 180 points during the week, reaching a high of 1.2174, a new high in two and a half years.
The British pound rose sharply during the week. In addition, the British pound also saw a surge, rising about 110 points during the week. However, there seems to be no good news from the current trade talks between the UK and the European Union, which limited the pound’s growth.
▼Bond Markets
Overnight, the yield on China’s 10-year Treasury note rose by 0.15%, while the yield on the US 10-year Treasury note fell by 2.6% and the yield on the US 3-month Treasury note fell by 15.92%.
In the stock market
U.S. stocks closed mixed, with the S&P 500 down 0.06%, the Nasdaq up 0.23%, and the Dow Jones up 0.29%; by this morning, Chinese stocks opened mixed, with the Shanghai Composite down 0.16%, the ChiNext down 0.41%, and Hong Kong’s Hang Seng up 0.31%.
[Key Outlook]
US Dollar: Dual Factors Pressured by U.S. or Down 10% for the Year
Deutsche Bank pointed out that the new rift in the political arena after the U.S. election is expected to be difficult to heal in a short period of time, in addition to the Federal Reserve will further strengthen the easing, which may cause the dollar index to continue to fall by 10% in 2021, while the corresponding European currencies will rebound sharply in the situation where the epidemic is expected to end with the help of vaccines.
The British pound: the pound broke the downward trend line or encountered resistance at 1.35
Commerzbank points out that GBPUSD has broken the long-term downtrend line and may encounter strong resistance at 1.35. On the downside, initial support is at 1.3065, then 1.3009, and as long as it holds above that point, the outlook for the pound remains bullish.
Gold: Gold ETF outflows, gold price key point 1850
Commerzbank says the dollar is still very weak, boosting gold prices. However, note that Bloomberg data shows that gold ETF holdings declined for the eighth day in a row. If ETF investors fail to return, the basis for gold’s rise will be very fragile. In addition, some analysts say that gold is facing resistance at $1850, and a breakout of $1850 would be a major move, but gold will face serious challenges in the short term.
[Key Outlook]
21:30 U.S. Non-Farm Payrolls data may be disappointing
Data released last month showed that U.S. nonfarm payroll employment increased by 638,000 in October and the unemployment rate fell to 6.9%. The U.S. Bureau of Labor Statistics said that employment in leisure and hospitality, retail trade, construction and other fields increased significantly in October.
On Wednesday, U.S. ADP employment for November was recorded at 307,000, missing expectations. The ADP figure was the smallest increase since the employment recovery began in May. The financial blog Zero Hedge commented that U.S. employment in both goods and services increased in November, but at a slower pace. Small and medium-sized businesses added the most jobs. Currently, there are signs that the U.S. labor market is rapidly declining.
Currently, the market is expecting the U.S. nonfarm payrolls to increase by 486,000 in November and the unemployment rate to be 6.8%. The current expectations of many institutions for non-farm payrolls are not optimistic, which is not good for the dollar index.
In addition, the following data are also of interest today.
21:30 U.S. November unemployment rate: previous value 6.9%, forecast 6.8%.
21:30 U.S. October Trade Balance: previous value -$63.9 billion, forecast -$64.8 billion.
21:30 Canada November employment: previous 83,600, forecast 20,000.
23:00 US October Factory Orders: previous value 1.1%, forecast 0.8%.
Saturday 00:00 Minneapolis Fed President Kashkari speaks.
Saturday 02:00 U.S. oil drilling total for the week ending December 4: 241 previous, 246 forecast.
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