The Beige Book report released by the Federal Reserve on Wednesday local time showed that U.S. retail sales data in March plummeted 8.7% month-on-month, which was not only worse than the -8.0% expected, but also set the largest monthly decline since the index was compiled in 1992. In addition, the New York Fed Manufacturing Index in the United States recorded -78.2 in April, the lowest level since data records were recorded. The previous value was -21.5 and the expected value was -35. During the subprime mortgage crisis, the index’s lowest value was only -34.3. Coronavirus or COVID-19 was mentioned a total of 93 times in the report.
Due to poor economic data and lackluster earnings reports from major banks, investors are concerned about the potential impact of the epidemic on the U.S. economy. Worries have deepened. On the evening of the 15th, the three major U.S. stock indexes opened sharply lower, with the S&P 500 and the Dow also falling sharply; banking stocks generally fell, with Bank of America falling more than 7%, Citigroup and Goldman Sachs falling more than 5%; airline stocks mostly rose, with American Airlines rose more than 4%; Tesla rose more than 3%. At the close, the Dow Jones Industrial Average fell 445.41 points, or 1.9%, to 23,504.35. The S&P 500 fell 2.2% to 2,783.36 and the Nasdaq Composite fell 1.4% to 8,393.18. The Dow and S&P 500 both posted their worst performances since April 1.
At 22:30 on April 15th, Beijing time, the United States announced EIA crude oil inventories for the week to April 10th (10,000 barrels). Data show that EIA crude oil inventories increased by 19.248 million barrels in the week ending April 10, the largest weekly increase in history. It is expected to increase by 12.024 million barrels, compared with the previous increase of 15.177 million barrels.
Previously, the latest monthly report released by the International Energy Agency (IEA) stated that oil demand in 2020 is expected to decrease by 9.3 million barrels per day compared with the previous year, with the decline in demand exceeding OPEC+ production cuts, oil reserves may become saturated.
In terms of the epidemic, according to the latest data from Johns Hopkins University in the United States, as of 21:58 on the 15th, Beijing time, there were 2,000,984 confirmed cases of new coronary pneumonia worldwide, with a total of 128,011 deaths. Among them, a total of 609,685 cases have been diagnosed in the United States, a total of 177,633 cases have been diagnosed in Spain, and a total of 162,488 cases have been diagnosed in Italy.
On April 14, gold futures hit a new high since November 2012, with the highest intraday price at $1,788 per ounce, approaching the $1,800 per ounce mark.
Federal Reserve Beige Book: Retail sales data plummeted 8.7% month-on-month, and the manufacturing index hit the lowest level since data began
On Wednesday local time, the Beige Book report released by the Federal Reserve showed that U.S. companies have been hit hard by the new coronavirus as economic activity “contracted sharply in all regions.” “The hardest-hit industries due to social distancing measures and mandated closures are the leisure, hospitality and retail industries,” the Fed said in the report. The coronavirus, or COVID-19, was mentioned a total of 93 times in the report.
Both U.S. retail sales and New York-area manufacturing have experienced historic declines. Social distancing measures aimed at stemming the spread of the coronavirus have brought the economy to a standstill. U.S. retail sales data in March plummeted 8.7% month-on-month, not only worse than the -8.0% expectation, but also the largest monthly decline since the index was compiled in 1992. In addition, the New York Fed Manufacturing Index in the United States recorded -78.2 in April, the lowest level since data records began. The previous value was -21.5 and the expected value was -35. During the subprime mortgage crisis, the index’s lowest value was only -38.2.
The Federal Reserve said: “Economic activity has contracted sharply across the United States due to the COVID-19 pandemic. All regions reported a highly uncertain business outlook, and most expect conditions to It will worsen in the next few months.”
Due to poor economic data and lackluster earnings reports from major banks, investors have deepened their concerns about the potential impact of the epidemic on the U.S. economy. Yesterday evening, the U.S. The three major stock indexes opened sharply lower. As of Wednesday’s close, the Dow Jones Industrial Average fell 445.41 points, or 1.9%, to 23,504.35. The S&P 500 fell 2.2% to 2,783.36 and the Nasdaq Composite fell 1.4% to 8,393.18. The Dow and S&P 500 both posted their worst performances since April 1.
Inventories remain high and international oil prices have fallen for several days
At 16:00 Beijing time on April 15, WTI fell below US$20/barrel to US$19.20/barrel, the lowest level since 2002. Brent crude oil futures fell further during the day. This means that the joint production cuts reached on April 12 have “ineffective” in boosting oil prices. Since the decrease in supply is not as good as the decrease in demand, international oil prices have once again fallen into a downward stalemate.
At 22:30 on April 15, Beijing time, the United States released EIA crude oil inventory data for the week to April 10. Data show that EIA crude oil inventories increased by 19.248 million barrels in the week of April 10, compared with an expected increase of 12.024 million barrels, and the previous increase of 15.177 million barrels. Shortly after the data was released, Brent oil prices expanded during the day.
The previously announced API US crude oil inventory data recorded 486.9 million barrels, and the market has expected that last night’s inventory data will also see a large increase.
At 4 pm on the 15th, the latest monthly report released by the International Energy Agency (IEA) stated that oil demand in 2020 is expected to decrease by 9.3 million barrels per day compared with the previous year. As demand declines beyond OPEC+ production cuts, oil reserves may become saturated. Immediately, U.S. oil fell nearly 4%, falling for 4 consecutive days, setting a new low since February 2002 to 19.2.��yuan/barrel. Brent oil fell more than 5%, falling below the US$28/barrel mark, setting a new low since April 2 to US$27.96/barrel.
Specifically, in terms of demand, the IEA monthly report stated that oil demand in 2020 is expected to decrease by 9.3 million barrels per day compared with the previous year; oil demand in the second quarter will decrease compared with the same period last year. 23.1 million barrels per day, compared with previous expectations for a decrease of 2.7 million barrels per day in December; oil demand in April fell by 29 million barrels per day year-on-year, falling to levels last seen in 1995. On the supply side, oil production in May is expected to decrease by 12 million barrels per day after OPEC+ reached an agreement to reduce production. Non-OPEC oil production may fall by 5.2 million barrels per day in the fourth quarter and 2.3 million barrels per day for the full year. In terms of inventories, the IEA monthly report showed that floating storage of crude oil increased by 229,000 barrels to 1.031 million barrels in March. Implied inventories increased by 12 million barrels per day in the first half of the year, which may exceed the logistics carrying capacity of the oil industry.
IEA Director Birol pointed out that looking back on the past, it can be said that 2020 was the worst year for the global oil market, and April was the worst month. In the second half of 2020, demand is likely to exceed supply. Volatility in global oil markets is dangerous to the global economy and more than we can tolerate.
Previously, OPEC+ announced an agreement to reduce production in the early hours of Monday morning, cutting production by 9.7 million barrels per day in May and June, and then gradually reduced the scale of production cuts. This production cut is the largest in history, but it still cannot fully offset the impact of the epidemic on global crude oil demand.
Goldman Sachs pointed out that assuming that OPEC core members can fully implement the production reduction agreement without discounts in May, and other members have a compliance rate of 50%, then OPEC+ production will actually be only one month lower than in 2020. Quarterly decrease of 4.3 million barrels per day. The bank believes that this scale of production reduction is far from making up for the loss of demand caused by the new crown epidemic, and WTI oil prices are at risk of falling to US$20 per barrel in the short term.
The IEA also stated that despite OPEC+’s efforts to reduce production, the increase in global oil inventories in the first half of this year will still reach 12 million barrels per day. The IEA has warned that a crude oil supply glut threatens to overwhelm the oil industry’s logistics infrastructure of tankers, pipelines and storage tanks in the coming weeks.
Gold is rising again, liquidity risk cannot be underestimated
On April 14, gold futures hit a new high since November 2012, with the highest intraday price at $1,788 per ounce, approaching the $1,800 mark. As of press time on April 15, COMEX gold fell 1.45% to US$1,743 per ounce, and Shanghai gold fell slightly by 0.29%.
In the view of CITIC Futures precious metals analyst Yang Li, the liquidity crisis superimposed on the forced position has dissipated, and the US dollar as a safe haven cash is king. Gold is expected to hit the bottom for the second time.
Yang Li believes that although the central bank has released liquidity, it is only a drop in the bucket. The stringent prevention and control measures imposed by the global outbreak of the new coronavirus have led to a slowdown in social activities, a decline in aggregate demand, a rise in unemployment, and a decline in wages. Consumption desire weakens and corporate profits shrink. The decline in financial assets led to passive deleveraging, and further selling of assets caused a liquidity run and strengthened the value of the US dollar. Therefore, it is difficult to say that the US dollar liquidity crisis will be resolved before the leverage is completely reduced. The leverage ratio calculated based on the U.S. stock financing balance is about 3 times, which is the same as the 2008 financial crisis. Compared with the low point of 2 when leverage was completely eliminated in 2009, there is still a gap. The economy will continue to shrink before the global epidemic is effectively alleviated, which is expected to set off a second round of liquidity storm.
In addition, he said that the spread of the epidemic caused three large gold smelting plants in Switzerland to suspend production, and there was a shortage of standard gold bar delivery. However, with the widening of the spot price difference and the expansion of delivery products, COMEX gold warehouse receipt inventory has increased significantly, from 8.5 million gold ounces in mid-March to around 17 million gold ounces on April 9. Futures warrants have surged in the short term, indicating an abundance of deliverable gold bars. </p
