The OPEC+ drama settled over the weekend, but the new week is still packed with events.
①Will the July LPR “cut interest rates”?
On Tuesday (July 20) at 9:30 a.m., China’s central bank will announce the 1-year loan market offer rate and 5-year loan market offer rate for July. on July 15, the day of the downgrade operation, the central bank scaled down and renewed the MLF, the interest rate was the same as the previous operation, and the focus of market attention now turns to the LPR offer for July.
CITIC Securities Ming Ming team said that the LPR quotation announced this week, as an important policy direction observation point, its changes will affect the subsequent monetary policy regulation strength and the trend of medium and long-term interest rates.
According to Qin Tai, chief macro analyst of Shenwan Hongyuan Macro, the MLF rate has not been lowered, and combined with the three factors that liquidity is still tight in the second half of the year, LPR is about the huge scale of the stock loan spread, and LPR is bound to the benchmark mortgage rate, LPR is expected to remain stable in the second half of the year, and will not be lowered.
②Beware of the big shakeup in the cryptocurrency world! Yellen will call U.S. regulators to discuss rules related to stable coins
According to reports, U.S. Treasury Secretary Yellen will call a meeting of the President’s Financial Markets Working Group (PWG) on Monday (19) and discuss cross-sectoral regulatory issues related to fiat-linked stablecoins.
In addition to the Treasury secretary, the president’s financial markets working group will include the Federal Reserve, the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission (CFTC), as well as the U.S. version of the “banking commission” Office of the Comptroller of the Currency (OCC), and the U.S. Federal Deposit Insurance Corporation (FDIC).
Regulators are increasingly concerned about the transparency of stablecoin transactions, the foreign exchange reserves backing them, and the extent to which market participants rely on them to enable decentralized finance (i.e., DeFi) transactions. As more and more companies with cryptocurrency businesses go public or prepare to go public, such as Coinbase and Circle, the industry needs further clarity on the regulation of stablecoins.
③ ECB to detail new monetary policy objectives
On Thursday (July 22), the ECB will announce its interest rate resolution and ECB President Lagarde will hold a press conference. The market is now widely expected that the ECB will continue to release dovish signals at this week’s meeting.
This will be the ECB’s first interest rate resolution after adjusting its monetary policy framework. The ECB previously announced an adjustment to its inflation target, adjusting the medium-term inflation target from “below but close to 2%” to 2% and emphasizing that upward or downward deviation from the target is not desired, which is the first adjustment in 20 years.
Although this week’s resolution is unlikely to be a fundamental change, but Lagarde’s interpretation of the new framework and the outlook for the bond purchase program remains important.
Lagarde has said that investors can expect new monetary stimulus guidance in the July policy meeting, and that the latest easing may be introduced next year. The ECB’s movements will also move the U.S. stock market, most notably because the Federal Reserve’s July policy meeting is also coming up.
Bipartisan vote on infrastructure bill to be held on Wednesday
U.S. Senate Majority Leader Schumer said last week that he will move a motion this Monday to hold a procedural vote on the bipartisan infrastructure bill this Wednesday, a deadline for Democrats to advance the $3.5 trillion budget framework.
Top Democrats agreed to include import tariffs on countries that lack aggressive climate change policies as part of the $3.5 trillion budget plan, according to the New York Times. U.S. House Speaker Nancy Pelosi said the House will amend the $3.5 trillion Democratic budget bill.
Earlier, a key Republican senator said bipartisan negotiators have dropped stronger tax enforcement in the $579 billion infrastructure bill that Democrats hoped to advance this week as Republicans seek to finalize how the plan will be paid for.
⑤ U.S. stock earnings to be in focus as sector leaders to disclose earnings reports
Even though the earnings season as a whole was as strong as expected, it was difficult to stop the three major indices from falling collectively on Friday and ending the previous three consecutive positive weeks at the weekly level due to concerns about the progress of the subsequent outbreak and the path of economic recovery. Because there is not much important macroeconomic data released this week, earnings reports will still be the top priority to influence the sentiment of the broader U.S. stock market.
More industry leaders will release results this week, including the “tech canary” Nifty, Twitter, Coca-Cola, Intel, Honeywell, American Airlines, At&T, American Express and others.
CFRA chief investment strategy analyst Sam Stovall said that this week’s earnings report will be the focus of the market, the mainstream expectation is that the S&P 500 companies’ profits will rise 66% year-on-year. This also means that investors may see Q2 earnings as the peak of the current earnings cycle, resulting in a stronger drive to bag. After all, the purpose of the investment has been achieved, while the subsequent quarters will be difficult to move further higher.
(6) UK lifts outbreak control measures this week, fearing global threat
The number of new coronary pneumonia diagnoses in the U.K. has soared to more than 50,000 on a single day, the highest in the country since Jan. 15 of this year. But the British government still insists on lifting most of the remaining outbreak control measures this Monday (19).
Scientists and government advisers around the world have accused the British plan of being immoral and dangerous for the entire planet, a disaster.
(7) Opening of the Tokyo Olympics in Japan
The Tokyo Olympics in Japan will begin on July 23. The Tokyo Olympics are a cause for concern at a time when the epidemic is rebounding everywhere, especially in Southeast Asia.
According to NHK News, the Tokyo Organizing Committee of Japan announced on the 18th that two foreign athletes in the Tokyo Olympic Village have been confirmed to be infected with the new crown. This is the first time an athlete in the Olympic Village has been diagnosed.
In the latest round of screening by the Tokyo Organizing Committee, 10 people were confirmed positive for nucleic acid. For epidemic prevention reasons, all games in the Tokyo, Hokkaido and Fukushima prefectures in Japan will be held empty for this Olympics. Currently, only three venues for cycling and soccer are left for the games that allow spectators to watch live.
On July 18, Tokyo, Japan reported an additional 1,008 confirmed cases of new coronary heart disease, with more than 1,000 new cases diagnosed on a single day for five consecutive days. According to the Tokyo Organizing Committee on the 17th, a total of 55 people have been diagnosed with New Crown pneumonia among the competitors and Olympic-related personnel associated with the Tokyo Olympics so far.