This week, the Fed doves out that domestic inflation has picked up, the U.S. epidemic has rebounded, and crude oil production has changed. There are four core changes.
First, the Fed's monetary policy will remain loose in the medium term. The Federal Reserve's June meeting said it would continue to carry out large-scale overnight and regular repo operations to maintain the asset purchase speed at least at the current level, and the market expects zero interest rate to last until the end of 2022. Second, in May, domestic social finance increased, CPI rebounded and PPI decreased. In May, social finance increased by 3.19 trillion, higher than expected by 3.1 trillion, and the stock increased to 12.5% year-on-year; new RMB loans increased by 1.48 trillion, slightly lower than expected by 1.6 trillion; M2 growth rate remained at 11.1%, M1 growth rate increased from 5.5% to 6.8%; CPI growth in may was 2.4%, mainly due to the fall of food prices, PPI decreased by 3.7% year-on-year, and the month on month decline narrowed. Third, the U.S. epidemic rebounded. This week, the number of confirmed cases in the United States exceeded 2 million. Fourth, Saudi Arabia said it would not cut production in June. Saudi energy minister said that Saudi Arabia's voluntary additional production reduction has reached its goal. After June, Saudi Arabia will not cut oil production beyond OPEC's commitment.
■ this week, base metal prices rose and fell in tandem. This week, LME tin, copper, aluminum, lead and zinc rose and fell 1.62%, 1.27%, 0.65%, - 2.08% and - 2.48% respectively. In May, the output of copper, aluminum, lead and tin increased, while the output of zinc fell. According to SMM, China's electrolytic copper output is 770100 tons, with a month on month ratio of + 2.35%, with a year on year ratio of + 21.56%; electrolytic aluminum output is 3071000 tons, with a year on year ratio of + 1.0%; primary lead output is 265000 tons, with a month on month ratio of + 1.07%, with a year on year ratio of + 5.13%; refined tin output in May is 11727 tons, with a month on month ratio of + 9.3%; refined zinc output is 474100 tons, with a month on month ratio of - 1.14%, with a year on year ratio of - 1.26%. Combined with the impact of the new crown epidemic on the global copper industry supply chain, the current production activities of copper resource suppliers mainly in Latin America are still suppressed by the epidemic, the demand of copper consumers mainly in China, Europe and the United States is gradually recovering, and the copper inventory is significantly reduced. SHFE copper stocks have fallen 27% year to date. The recovery of domestic demand led to a substantial increase in the profitability of electrolytic aluminum enterprises. In the second quarter, under the high pressure of raw material cost, some electrolytic aluminum enterprises overhauled in advance, and with the improvement of domestic epidemic situation, downstream demand recovered significantly, aluminum ingots began to enter the process of destocking, and the obvious excess capacity of aluminum oxide pushed the price of aluminum oxide down, and the profit of electrolytic aluminum enterprises recovered. At present, the stagflation of relevant targets in the equity market is obvious, so it is suggested to pay attention to the opportunity of revaluation and allocation of equity assets.
■ this week, gold prices rose, further highlighting the value of gold call options. First, the dove of the June meeting of the Federal Reserve this week said that it would maintain the speed of asset purchase at least at the current level, and the market expected that zero interest rate would last until the end of 2022; second, the 10-year real interest rate in the United States fell by 20bp this week, and the Comex gold and silver rose and fell by + 3.2%, + 0.61%, and the SHFE gold and silver rose and fell by + 1.5% and 0.00%, respectively. This week's non-commercial net long position accounted for 43.86%, down 2.18pct from last week. We believe that no matter the outbreak worsens or the economic recovery, considering that the monetary policy of the Federal Reserve is pigeon like to stimulate inflation, this shows that the real interest rate will further decline, and the value of gold call option will be highlighted. If the impact of the epidemic continues to worsen and the economic recovery fails to meet expectations, the probability of selling gold again in the context of unlimited QE has been opened is extremely low, and the Federal Reserve is bound to further increase its easing efforts; if the epidemic is over, the Federal Reserve will still maintain a low nominal interest rate until inflation expectations rise to more than 2%, both scenarios assume that It is conducive to the decline of real interest rate and the rise of gold price; coupled with the increase of geopolitical risks in the long term in the future, we continue to firmly believe in the value of gold allocation.
■ important economic data and meeting outlook next week. Tuesday: the Bank of Japan announced the interest rate decision; BoJ president Kuroda tohiko held a press conference. Wednesday: U.S. may retail sales monthly rate; Federal Reserve Chairman Powell attended the Senate Financial Committee video hearing, testifying on the Federal Reserve's semi annual monetary policy report. Thursday: OPEC + held a ministerial Monitoring Committee meeting; the Bank of England released the interest rate resolution and meeting minutes. Friday: the FOMC voting Committee and Cleveland Federal Reserve Chairman Ben Meister delivered a speech on "the Fed's response to the new crown epidemic".
■ it is recommended to continue to pay attention to precious metals, copper, aluminum, tin and new material targets related to new energy vehicles and 5g spring tide. Precious metals: Chifeng gold, Yintai gold, Shandong gold, Zhongjin gold, humon, Huayu mining, Shengda resources (silver). Copper: Western mining industry, Yunnan copper industry, Jiangxi copper industry, Luoyang molybdenum industry; aluminum: Yunnan Aluminum Co., Ltd. and Shenhuo Co., Ltd.; new materials: Bowei alloy, Yian technology, Asia Pacific Technology, and Sitong new material.
■ risk tips: 1) the negative impact of the epidemic is more than expected, and the global economic recession is more than expected; 2) the global financial market has a liquidity crisis again.
1. One week market review
This week, the Shanghai Composite Index, Shenzhen Composite Index and nonferrous sectors fell by - 0.4%, + 0.6% and - 0.2% respectively. This week, the Fed doves out that domestic inflation has picked up, the U.S. epidemic has rebounded, and crude oil production has changed. There are four core changes. First, the Fed's monetary policy will remain loose in the medium term. The Federal Reserve's June meeting said it would continue to carry out large-scale overnight and regular repo operations to maintain the asset purchase speed at least at the current level, and the market expects zero interest rate to last until the end of 2022. Second, in May, domestic social finance increased, CPI rebounded and PPI decreased. In May, social finance increased by 3.19 trillion, higher than expected by 3.1 trillion, and the stock rose to 12.5% year on year; new RMB loans were added