Heading into the recent OPEC+ meeting, oil prices faced challenges primarily due to supply constraints rather than demand dynamics. In response, Saudi Arabia took proactive measures to address this issue by reducing its supply to 9 million bpd. Additionally, all other OPEC+ producers agreed to extend their earlier cuts until the end of 2024. The … Read more
Calculating the daily expected move of the S&P500 for the month aheadThe VIX is the so called ‘fear index’ that traders use to evaluate how concerned investors are. The VIX is an indicator of 30-day implied volatility from the use of S&P500 index options prices. The way it looks is like this. When S&P500 traders … Read more
With all the talks and drama surrounding the US debt ceiling it is easy to lose sight of what’s going on in terms of US rates. The latest STIR market pricing has a 66% chance that the Fed will be on hold in June. Powell has recently hinted at the possibility of a June hold, … Read more
This week finishes off with the Fed’s preferred measure of inflation in the shape of the USE PCE print. The PCE print refers to the measurement of personal consumption expenditures, which tracks the expenditure on goods and services by US citizens. Since around 2012, the PCE index has become the primary inflation index used by … Read more
Recently there has been an excellent piece on Bloomberg explaining why oil prices have been struggling due to supply issues, rather than demand issues. The logic in the article by Javier Blas has been that sanctions by Western countries on Iran, Russia, and Venezuela have not really worked. Instead the sanctions have helped fuel a … Read more
The Bank of England has to avoid two ditches. On one side of the road is the ditch of high inflation. With UK inflation over 10% and the core at 6.2% the BoE is trying to fight off deep rooted inflationary pressures, so it has to keep hiking rates. On the other hand the BoE … Read more
In their last rate meeting the Bank of Canada highlighted their confidence that inflation was falling. However, they did see that core inflation was stickier globally and that the service sector was showing persistent price pressures. See here for details on their last meeting. CAD reaction to Canadian inflation data from April 18 On April … Read more
On Thursday the Bank of England meet and they are faced with a tough decision. In an ideal world they want to be able to signal to markets that inflation is under control and that perhaps the BoE do not need to hike interest rates any more. The problem is that inflation in the UK … Read more
Well, at least that is the view of some fund managers in a recent Bloomberg article from JPMorgan, UBS, & Morgan Stanley who favour a move back into bonds now. Here is their logic.Firstly, they cite that high grade dollar bond yields exceed dividend yields of companies in the Morgan Stanley Capital International’s All Country … Read more
Bloomberg recently wrote a helpul piece summarising reasons why professional investors think the USD may be weaker going forward. This is due to the Fed reaching the peak in their rate cycle, the strength of the yuan and the JPY, as well as potential de-dollarization trend that could accelerate over the next decade. The Fed … Read more
