Following the Federal Reserve, the Bank of England sharply raised interest rates by 75 basis points, causing another storm in the market. The U.S. 2/10-year Treasury bond yield inverted to a record high. What does this mean?
German Chancellor Scholz visits China today, and the list of accompanying CEOs highlights cooperation
German Chancellor Scholz started his first visit to China on November 4, and the accompanying German economic delegation also became the focus of international attention. At a time when there are some noises in Sino-German economic and trade relations, this visit undoubtedly conveys the importance that German industry and commerce attaches to the Chinese market. The business leaders who accompanied Scholz on his visit to China come from many industries, and the companies they represent have annual revenue in China of tens of billions of euros. Relevant experts said that these representative German executives visited China with Scholz, proving that any “centrifugal force” that wants to alienate Sino-German economic and trade relations is outweighed by the huge attraction brought by China’s economic development.
The Bank of England raises interest rates by 75 basis points, the largest increase since 1989
On November 3, the Bank of England announced an interest rate decision that showed the Bank of England raised interest rates by 75 basis points, raising the policy interest rate from 2.25% to 3%, in line with expectations. The rate hike set a new record in the UK since 1989, with interest rates rising to a 14-year high.
The Bank of England said the scale of the November rate hike would “reduce the risk of longer and costly tightening later on.” If the market path used in the forecast is maintained (interest rates peak at about 5.25% next year), it will cause GDP to fall by 3% and eventually drive inflation to zero. The outlook, based on interest rates remaining at the current 3% level, suggests a shorter and shallower recession, with inflation expected to fall closer to target in two years. It is expected that if the interest rate is maintained at 3%, the CPI in the fourth quarter of 2024 will be 2.2%, and the CPI in the fourth quarter of 2025 will be 0.8%; if calculated according to market interest rates, the CPI in the fourth quarter of 2024 will be 1.43%, and the CPI in the fourth quarter of 2025 will be 1.43%. The CPI in the fourth quarter will be 0.02%. Inflation is expected to peak at around 11% in the fourth quarter of this year. It could even be “powerful” if inflationary pressures persist, or more rate hikes are needed.
After the announcement of the Bank of England’s decision, the pound against the US dollar accelerated its decline. The US stock market once fell below 1.1160 before the market opened, and fell by about 2% during the day. The decline in US stocks narrowed in early trading, and expanded in midday. By the time the US stock market closed, it hovered around the 1.1155 line, and fell by more than 2% during the day. 2%, the lowest since October 21.
The oil and chemical sector is clearly differentiated
The current crude oil market is oscillating in a range, and the supply and demand of petrochemical products have become the focus of market transactions. The crude oil market may become more volatile in the future.
“The key to the trend of the petrochemical sector lies in the unilateral trend of crude oil and the judgment of the crack price difference of refined oil products, especially diesel.” Zhang Zhengze said that the supply side of the unilateral trend of crude oil depends on the rhythm and actual effect of the implementation of OPEC+ production cuts. From the demand side Look, if the interest rate hike continues and pushes the U.S. manufacturing PMI below the boom-bust line, diesel demand may collapse. “The collapse of diesel demand will not only weaken the unilateral price of crude oil, but also lead to a fall in the diesel cracking spread.” In his view, the fall in the diesel cracking spread will also affect other varieties of the oil and chemical sector, such as asphalt. Disk profits, diversion effect of low-sulfur fuel oil raw materials, etc.
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