The Fed's interest rate hike is in line with market expectations. This is the fifth time the Fed has raised interest rates this year. What is the impact on commodities? So Bian Xiao is here today to sort out the impact of the Fed's interest rate hike on commodities. Let's have a look!
The Fed raised interest rates sharply again.
In the early morning of September 22nd, Beijing time, the Federal Reserve announced that it would raise interest rates by 75 basis points and raise the target range of the federal funds rate to 3.00% to 3.25%. This is the fifth time the Fed has raised interest rates this year, and it is also the third time to raise interest rates by 75 basis points.
As far as the disk reaction of commodities is concerned, as of the close of morning trading on September 22nd, the global commodity reaction was relatively mild, and the main contracts of domestic commodity futures generally rose.
In this regard, many futures industry analysts said that the early reaction on the 22 nd was mainly because the Fed's interest rate hike was in line with market expectations, and the short-term market may be a rebound after the interest rate hike boots landed. However, the subsequent interest rate hike will continue, which will have a negative impact on the overall commodities. Different varieties are affected differently. Goods with tight supply and less inventory pressure are less affected, while goods with loose supply and greater inventory pressure have a greater decline.
Looking forward to the fourth quarter, the industry believes that it is expected that the macro environment at home and abroad will still suppress commodities to a certain extent, and the trend of commodities is highly probable that the center of gravity of shocks will move down slightly. In terms of investment strategy, at present, there is still a lack of trend in bulk commodities, so it is not suitable for large-scale unilateral long-short allocation, but should seek band operation and hedging among varieties.
Medium-term bearish commodity
Xia Yingying, a metal analyst at nanhua futures (603093), said that the bitmap shows that the Fed will continue to raise interest rates, raise the interest rate target before the meeting in 2023, and keep the interest rate at a high level in 2023 to control inflation. The bitmap shows that the Fed expects the interest rate to reach 4.4% during the year, that is, raising interest rates125 BP during the year; It is estimated that the interest rate will be 4.6% by the end of 2023, that is, the interest rate will be raised by 25BP in 2023.
"Between the economic downturn and curbing inflation, the Fed is more inclined to curb inflation. Therefore, in the remaining Fed interest rate meetings this year, the Fed will continue to raise interest rates with high intensity. The Fed's interest rate hike is bad for commodities. " Shen, director of macro finance at Zheshang Futures Research Center, told the First Financial Reporter.
Xia Yingying also said that the Fed's interest rate hike will continue, and there is no signal that the Fed has reversed its "eagle" position. As liquidity continues to shrink and the cost of capital rises, the US dollar continues to gain more support, and it is expected that the bulk demand will further shrink. At the same time, with the rapid rise of interest rates, the risk of economic recession in the United States will rise, which will accelerate the market's concerns about economic recession and have an impact on financial markets and commodity prices.
Cheng, a senior researcher in the futures industry, analyzed that the Fed's interest rate hike may bring negative pressure on commodities from three aspects: First, raising interest rates means tightening liquidity and raising the nominal interest rate of the US dollar, which will lead to a decline in the real interest rate of the US dollar when inflation slowly falls, thus increasing the opportunity cost of commodities; Second, it may lead to a credit crunch, which may lead to a sustained slowdown in global economic growth and a slowdown or decline in demand for bulk commodities, which will be negative from the demand side; Third, it may lead to capital outflow from emerging markets, aggravate financial market panic and lead to commodity selling.
What commodities can we focus on in the fourth quarter?
The Fed's interest rate hike will be a major factor that needs continuous attention in the interpretation of commodity market outlook. Looking forward to the fourth quarter of this year, what other factors will affect the commodity market?
Xia Yingying believes that there are still many uncertainties at home and abroad in the fourth quarter. The United States needs to pay attention to the risk of economic recession and the changes in the strength of the Fed's "hawks"; In Europe, with the continuous follow-up of interest rate hikes, the debt default risks of highly indebted countries such as Greece and Italy still need to be vigilant. At the same time, in the turbulent international situation, the natural gas problem will be more difficult for Europe's "cold winter" test and geopolitical stability in Europe. The disturbing factors of domestic epidemic situation and policies can not be ignored. Under the strong expectation of "golden September, silver and ten", we need to continue to pay attention to policy support and realistic verification.
Shen also believes that the trend of commodities in the market outlook needs to pay attention to the impact of the Fed's interest rate hike and geopolitics.
"From the macro environment, the overseas Fed will continue to raise interest rates until next year, which is not conducive to the rise of commodity prices in terms of global economic cycle, commodity demand and real interest rates. However, as the Fed's interest rate hike will gradually ease in the future, the negative pressure on commodities will also slow down marginally, so it is difficult for commodities to fall deeply. " Cheng believes that the high probability of commodity trend in the fourth quarter is that the center of gravity of the shock moves down slightly.
Then, which varieties are worthy of attention in the fourth quarter, and what is the trend expectation? "The varieties that need attention are mainly concentrated in the opportunities for energy-saving losses." According to Cheng's analysis, in the first three quarters, affected by the overseas energy crisis and geopolitical conflicts, crude oil and downstream energy commodities declined little. As for the varieties purchased, we can pay attention to natural gas (the risk of natural gas supply in Europe is still outstanding in winter) and some agricultural products (00006 1) (La Nina phenomenon may continue this winter).
Xia Yingying told the First Financial Reporter that the industrial products are still relatively empty, but the transaction in rhythm will be more difficult than before, and it is necessary to pay close attention to the node of the transformation between expectation and reality. The varieties are mainly domestic building materials such as glass, soda ash, PVC and plastic. Although nonferrous metals is generally empty, it is necessary to pay attention to the impact of European energy problems on the supply side in winter and the current real disturbance of low inventory, which may be more difficult to grasp in rhythm. Multi-head configuration can choose energy-related varieties with relatively low current valuation, such as fuel oil, asphalt, PTA and other varieties.
As far as investment risk is concerned, Shen said that it is necessary to pay attention to the market's expectation of the global economic recession under the Fed's subsequent high-intensity interest rate hike, and pay attention to the risk of falling commodities.
Cheng believes that at present, bulk commodities are still lack of trends, and it is not suitable for unilateral long-short allocation on a large scale. Instead, we should seek band operation and hedging among varieties, such as international empty commodities and commodities that reflect the relationship between domestic supply and demand. Pay attention to the opportunity of energy-saving goods to make up for the decline in the market outlook. Non-ferrous metals take profits on rallies, and the rebound may be staged, because there is negative feedback in demand after the price rises (weak profits in the middle and lower reaches and insufficient orders).