Western sanctions against Russia fall but have no effect

Survey: Russia's central bank is expected to cut interest rates by 100 basis points to 10% on Friday

① A Reuters poll showed that Russia’s central bank is expected to cut its key interest rate by 100 basis points to 10% on Friday, in an attempt to reduce loan costs amid sluggish consumer demand and stagnant inflation. The bank has been gradually reversing its emergency rate hike to 20% in late February, triggered by Western sanctions following Russia's February 24 invasion of Ukraine. Since then, Russia's central bank has cut its key rate three times, by 300 basis points each, and said after an unscheduled meeting in May that it was open to the prospect of a rate cut at an upcoming meeting.

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The yen hit a 20-year low against the dollar. As the Federal Reserve raised interest rates, the yield gap between Japanese and U.S. Treasury bonds widened, dragging down the yen. The yen fell 0.6% to 131.63 to the dollar, the lowest level since April 2002, falling below the previous 20-year low of 131.35 set on May 9; the Fed's hawkish stance is getting stronger, and U.S. bond yields are higher , which has weighed on the yen, prompting a particularly sharp decline since March. On Monday, U.S. Treasury yields continued to rise, with the 10-year bond rising to 3.07%, well above the Japanese government bond yield of 0.24%.

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Spot gold was basically stable, and the U.S. dollar index narrowed its decline, limiting the rebound in gold prices. Some investors believe that the monetary tightening cycle is expected to continue to provide support for the dollar. U.S. consumer price data coming out this weekend could affect market expectations for the pace of Fed tightening after the latest data showed a tight labor market.

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The Goldman Sachs report said that the inflation drivers related to the pandemic should subside soon, helping the Fed in its task of cooling prices. Pandemic-era stimulus is running out, supply chain bottlenecks are likely to ease, and workers are likely to re-enter the workforce. These should all relieve some of the pressure in the economy. A Fed rate hike could push U.S. economic growth "to around 1% to 1.5% below potential to further reduce labor demand and rebalance the labor market."

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Asian oil buyers are planning to buy more crude from Saudi Arabia, despite a larger-than-expected rise in prices for the region. Currently, at least two refiners intend to ask Saudi Arabia to increase production in July. And investors say that across Asia, most of Saudi Arabia's long-term refiner customers are expected to use their full contractual quotas as refinery profits soar. Oil from other regions such as the United States and West Africa is more expensive than Saudi Arabia, they added.

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The U.S. government may acquiesce to Iran’s export of more oil to the global market while still under U.S. unilateral sanctions, a senior official from the Dutch Vitol Group, a global oil trading giant, said, in an effort to stabilize international oil prices and reduce the impact of rising gasoline prices in the United States. economic and political pressure. The parties involved in the comprehensive agreement on the Iranian nuclear issue have held several rounds of negotiations in Vienna, the capital of Austria, on the resumption of the implementation of the agreement between the United States and Iran, but there has been no result. However, Mike Miller, head of Asia at Vitol Group, speculated on a podcast on the Gulf Intelligence Agency of the United Arab Emirates think tank on the 5th: "Uncle Sam may allow a little more sanctioned (Iran) oil to flow out.

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The EU's oil sanctions plan against Russia has officially landed, and it also has temporary exemptions for landlocked members such as Hungary; OPEC+ agreed to further increase production to ease the oil crisis, but the market is not optimistic about this, and international oil prices have jumped to 120 USD/barrel above. The long-awaited EU sanctions against Russia's oil program officially passed. The communique issued by the European Commission stated that the organization will gradually prohibit member states from purchasing Russian crude oil by sea in the next six months, and ban the import of Russian refined oil products by sea in the next eight months; but landlocked countries such as Hungary will temporarily Obtained an exemption for importing Russian oil through onshore pipelines.