Digest

  • Recession vs reflation

    Recession vs reflation Cover image Published 15 Nov 2019 by
    The big moves in risk assets this year have been driven by wildly varying perceptions that keep vacillating between recession and reflation. Last spring, following the yield curve inversion and the US Fed overtightening interest rates into the end of 2018, traders began to position for a recessio..

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  • The ball is in OPEC's court

    The ball is in OPEC's court Cover image Published 8 Nov 2019 by
    The OPEC meeting is just under four weeks away and already traders are asking if the organisation will commit to deeper production cuts in 2020. After all, with consensus balances increasingly seeing stock builds in 2020 due to tepid demand growth and robust non-OPEC supply growth, if OPEC wants..

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  • On the margin

    On the margin Cover image Published 1 Nov 2019 by
    The global economic slowdown, and all the demand uncertainty that comes with it, has been a big headwind to the crude market this year, despite a very strong physical market. With flat price continuing to fall, some now believe that demand must be lower than the implied data suggest, otherwise pr..

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  • Risk vs uncertainty

    Risk vs uncertainty Cover image Published 25 Oct 2019 by
    If there is one prevailing theme for investors at the moment, it is a lack of confidence. Investors are struggling to find belief, not because there are a lot of risks. After all, risks can be managed and even hedged. This lack of belief stems from uncertainty. Uncertainty introduces the unknown..

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  • Evolving narratives

    Evolving narratives Cover image Published 18 Oct 2019 by
    Three narratives have kept oil prices from rallying despite tightening crude fundamentals since June of this year. These are fears of surging US liquids production growth, slowing demand growth due to the escalating US-China trade war, and the risk of the US lifting sanctions on Iran and flooding..

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  • Breaking up is hard

    Breaking up is hard Cover image Published 11 Oct 2019 by
    After some 30 years of being the global supercouple, Chimerica—the geopolitical equivalent of Brangelina—are breaking up, and it is likely to be a messy and ungraceful affair. The era of cooperation between the US and China is over and an era of competition has already begun, even if..

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  • Controlling the narrative

    Controlling the narrative Cover image Published 4 Oct 2019 by
    How risk assets trade over the next few months may depend on who controls ‘the narrative’ over three critical issues for the market—Saudi production, the US economy and impeachment proceedings against Donald Trump. First, the Saudi’s narrative that ‘everything is normal’ is of prime importance to..

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  • Perception vs reality

    Perception vs reality Cover image Published 27 Sep 2019 by
    In the oil market, perception is sometimes more powerful than reality. Right now, the perception is that the market is extremely well supplied, demand is weak and peace is about to break out in the Middle East. After spiking dramatically on 16 September, the Monday after the attack on Saudi oil f..

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  • Restoring deterrence

    Restoring deterrence Cover image Published 20 Sep 2019 by
    Last night, six days after the attack on the Abqaiq facility, Saudi-led coalition forces carried out strikes against ‘military targets’ in Yemen. We believe this is the first step in trying to achieve three clear goals of the US and its allies in the region in confronting Iran and its proxies. On..

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  • Cart before the horse

    Cart before the horse Cover image Published 13 Sep 2019 by
    There was sense a of panic emanating from the White House this week. First, Trump suddenly (perhaps even impulsively) fired his national security advisor John Bolton, triggering frantic speculation in the oil market that the US was about to ease sanctions on Iran. This was followed within a day b..

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  • The spin cycle

    The spin cycle Cover image Published 6 Sep 2019 by
    Risk markets seem to be stuck in a spin cycle at the moment, getting jerked around by the constantly shifting flow of news and tweets. Given that markets have been in this weird place where bad news is bullish and good news is bearish, it is at least reassuring that the market rallied this week o..

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  • Running off the bulls

    Running off the bulls Cover image Published 30 Aug 2019 by
    Since mid-June, crude stocks in the US, Japan and ARA combined have drawn by 60 mb. But over the same period, Brent has fallen from a peak of $66 per barrel in late June to $58 per barrel in mid-August and is hovering just over $60 per barrel at the time of writing. The broader market continues t..

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  • Fishing for rate cuts in Jackson Hole

    Fishing for rate cuts in Jackson Hole Cover image Published 23 Aug 2019 by
    Judging by the size of the trading volume this week, it appears that many have decided to go on vacation for the rest of the summer. Liquidity is thin and, as such, there have been a number of wild intraday swings across risk assets, with notable short squeezes in the credit and crude markets. Ho..

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  • The new economic disorder

    The new economic disorder Cover image Published 9 Aug 2019 by
    Due to the summer holiday period, there will be no Macro Digest next week. The next Macro Digest will be published on 23 August. Risk assets got a boost late this week. The rally was driven by a market perception that the People's Bank of China (PBoC) is trying to stabilise the yuan rather than f..

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  • Oops, he did it again

    Oops, he did it again Cover image Published 2 Aug 2019 by
    Just as financial markets were beginning to digest the Fed’s decision on Wednesday to lower rates, President Donald Trump pulled the rug out from under the market on Thursday when he announced via Twitter that that the US would impose 10% tariffs on an additional $300 billion of Chinese goo..

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