On March 27, the Federal Reserve released its 2023 financial report that shocked global markets. The report showed that the Federal Reserve's spending exceeded its income by a whopping $114.3 billion last year, which not only set a new record, but also highlighted the enormous financial pressures the Fed faces in the changing interest rate environment. This loss stands out when compared to the net profit recorded in 2022.
The report details that the main reason for the huge losses is that the Fed's interest payments to financial institutions have risen sharply, while its interest income has decreased, which has nearly doubled interest expenses. This reflects the complexity and challenges the Fed faces in adjusting monetary policy and responding to economic fluctuations.
At the same time, the domestic consumer market has shown a positive trend. On March 26, Vice Minister of Commerce Guo Tingting said at a press conference that with the in-depth implementation of a series of policies to expand domestic demand and promote consumption, China's consumer market is expected to further maintain a good momentum of development. She pointed out that the favorable factors and positive conditions for promoting consumption growth are accumulating, the internal driving force for consumption growth continues to strengthen, and new consumption potential is gradually released.
However, despite the positive overall market environment, the metal market is facing some downward pressure. On Wednesday, Shanghai copper main month 2405 contract after the opening of the diving market, the intra-plate price fluctuation downward, as of 09:55, the latest offer of 72,000 yuan/ton, down 140 yuan, or 0.19%. At the same time, the London copper market also showed a volatile weakening trend, the latest price of 8825 US dollars/ton at 10:00 Beijing time, down 38.5 US dollars, or 0.43%. Behind this, in addition to the market concerns caused by the huge loss of the Federal Reserve, it is also closely related to multiple factors such as domestic and foreign economic conditions, consumer confidence and exchange rate fluctuations.
The latest economic data showed that while durable goods orders rose more than expected in February from the previous month, house prices fell in January from the previous month and consumer confidence weakened. The combination of these factors has left the market lacking a strong catalyst to push metal prices higher. In addition, the strong rise of the US dollar and the cooling of market risk appetite have also weighed on the trend of metal prices.
From the perspective of the domestic copper market, the weakness of downstream consumption has led to poor storage of Shanghai copper stocks, and the spot market is still weak. The quotation of the supplier is firm, while the downstream price is high and the supply is more wait-and-see. This situation has repeatedly delayed the inventory turning point, and the lack of consumption after returning to the fundamentals has become the main idea of the short side. However, considering that there is a bottom support for copper prices on the supply side, the current low pullback space is limited.
Yangtze River non-ferrous metal network data show that the Yangtze River spot 1# copper price was 71670-71710 yuan/ton, with an average price of 71690 yuan, down 350 yuan/ton from the previous trading day.
Overall, although copper prices may continue to face certain downward pressure in the short term, in the long run, with the gradual improvement of the domestic and foreign economic environment and the continued recovery of the consumer market, copper prices are expected to stabilize and rebound. In terms of operation strategy, it is recommended that investors maintain a cautious and optimistic attitude and treat the Shanghai copper market with low and many ideas.
In the future, the market still needs to pay close attention to the impact of factors such as domestic and foreign economic situation, policy changes and exchange rate fluctuations on the metal market. At the same time, investors should also strengthen risk management and allocate assets rationally to cope with possible market fluctuations and risk challenges.
