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Aggregate of Institutional Views on Financial Markets

On August 4th, institutions summarized their views on the stock market, commodities, foreign exchange, economic prospects and central bank policy prospects:

1. Institutions predict that the data on new credit and social financing in July still performed well, and the credit structure is expected to be optimized;

Financial data for July will be released soon. Many institutions predict that the new credit and social financing data in July will still perform well, the credit structure is expected to be optimized, and the proportion of medium and long-term corporate loans will remain high. In the next stage, monetary policy will continue to provide a sound monetary and financial environment for economic recovery and increase support for corporate credit. In terms of social financing, institutions predict that government bonds will still be the main support for the increase in the scale of social financing. Political Commissar Lu, Chief Economist of Industrial Bank, believes that due to the expected increase in the year-on-year growth rate of the stock of social financing in July, the expansion of the tax rebate policy to supplement the financial resources of enterprises, and the low base in the same period last year, the year-on-year growth rate of M2 in July is likely to increase. continue to rise

2. Bank of Spain: Spain's food prices rose faster than other countries in the euro area;

On August 3, local time, Western media reports showed that the latest report from the Bank of Spain pointed out that the increase in food prices accounted for 17% of the inflation rate in the entire euro area, but in Spain, this proportion rose to 22%, which means Food prices in Spain rose more than the rest of the euro zone. In July 2022, the price of edible oil in Spain increased by 37% year-on-year, and the price of cereals, coffee, dairy products and eggs, and meat all increased by more than 10% year-on-year, and the year-on-year increase of most products was higher than that of the euro area

3. UBS strategist: The European gas crisis may cause the pound to fall to a record low;

UBS strategists believe that both the euro zone and the UK are likely to experience energy shortages this winter, and that UK energy spending is expected to rise further in October, exacerbating the inflation and cost of living crisis. In this case, the pound will fall to an all-time low this year. They cut their fourth-quarter GBP/USD forecast to 1.15 from 1.26. That's almost equal to the 2020 period when the pandemic caused global market turmoil, and only slightly better than the situation in 1985. It's a bold contrarian forecast, as most analysts expect the pound to hold steady at around $1.22 by year-end as the Bank of England hikes rates. UBS strategists believe that even the biggest rate hike by the Bank of England in nearly 30 years will not bring a lasting boost to the pound

4. Institutional analysis: The US service industry unexpectedly rebounded in July, and the ISM survey showed that price growth slowed down;

The U.S. services sector unexpectedly rebounded in July, as strong order growth and easing supply bottlenecks and price pressures supported the view that the economy was not in recession (despite a fall in output in the first half). The unexpected rebound came after the Institute for Supply Management's (ISM) manufacturing survey released on Monday showed a modest slowdown in factory activity last month. This is in stark contrast to S&P Global's July survey of a contraction in the services sector. Wild swings in inventories and trade deficits associated with chaotic global supply chains are the main reasons. Still, overall economic growth momentum has cooled as the Federal Reserve has sharply tightened monetary policy to fight inflation, but services sector activity is being supported by a shift from spending on goods to services

5. Chris Williamson, chief business economist of S&P Global Market Intelligence, commented on the final value of the Markit service industry PMI in the United States in July: Tighter financial conditions mean that the financial services industry is leading the economic slowdown, and the Federal Reserve will further raise interest rates significantly because The data could exacerbate the downturn. At the same time, rising interest rates, coupled with a continued surge in inflation, have spilled over into the consumer sector, meaning that the spring surge in household spending on goods and activities such as travel, tourism, hotels and entertainment has now reversed as household spending shifts towards living necessity

6. OPEC+ agrees to increase production slightly in September;

OPEC+ agreed to increase production by 100,000 bpd in September, well below the increase OPEC+ has made in recent months at a time when the market is tight. OPEC+ had previously agreed to increase production by more than 600,000 bpd in July and August. Delegates at the meeting revealed that ministers from various countries supported the proposal to increase production. Delegates also said that OPEC+ will distribute production quotas among member countries proportionally. In recent months, OPEC+ has delivered only a fraction of its pledges to increase production, as only Saudi Arabia and the United Arab Emirates have the capacity to raise output. Still, the deal is a faint sign that Saudi Arabia and the U.S. are on the road to reconciliation

7. French Minister of Energy Transition: France's strategic natural gas reserves reach 80%;

French Energy Transition Minister Agnès Panier-Lunachet said in an interview that France has completed 80% of its strategic natural gas reserves. According to this progress, France is expected to complete 100% of its reserves on November 1. She called on the French to reduce gas and electricity consumption. At the same time, she said on the energy issue that Europe will remain united, France needs to import electricity from Germany, and France will also support Germany on the natural gas issue.

8. Analysts on the financial website Fxstreet look ahead to the Bank of England interest rate decision: At the critical moment before the announcement of the Bank of England interest rate decision, the pound remained steady against the dollar. The ratio of votes on how much to raise interest rates and Bank of England Governor Bailey's guidance on the path of future rate hikes will be key. If the voting ratio changes, or if there is any sign of a slowdown in the rate hikes, GBP/USD will take a huge hit, possibly heading towards the 1.2000 mark. Moreover, money markets are now pricing in an 82% chance of a 50 basis point rate hike from the Bank of England tomorrow, compared to an 18% chance of a 25 basis point hike. However, the economic uncertainty brought about by the European gas crisis could lead the Bank of England to downgrade its growth forecast, which could lead the Bank of England to take a dovish stance and consider slowing or even pausing the tightening cycle

9. Goldman Sachs: The Bank of England is expected to raise interest rates more decisively and initiate an aggressive quantitative tightening policy;

Goldman Sachs strategists believe the Bank of England is likely to take more forceful action at tomorrow's meeting, raising interest rates by 50 basis points in response to high inflation. It also appears that the Bank of England will say it will implement aggressive quantitative tightening at a rate of £10bn per quarter starting in October. The Bank of England is likely to raise its short- and medium-term inflation forecasts while downgrading its 2022 economic growth forecast. The Bank of England's policy decisions will remain data-dependent and will be willing to act aggressively if high inflation persists. Despite risks to growth, firm inflation and a tight labor market will support further policy tightening after this month's meeting

10. UBS: OPEC+ is still difficult to increase production in the near future;

OPEC+ will meet today to discuss whether to increase production in September. Libya's crude oil exports have rebounded strongly in the past two weeks as the ban on oil production and shipments was lifted. However, OPEC+ struggled to meet previous quotas and its available spare capacity continued to decline. We believe it will still be difficult for OPEC+ to ramp up production in the near term

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