Archives of “March 2020” month

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OPEC meeting today comes to an end, what have we learned so far?

  
  Analysis

OPEC to hold press conference tomorrow after the OPEC+ meeting

OPEC Russia

So, OPEC has agreed to a proposal to cut oil output by 1.5 mil bpd. That amount is said to be split in a way where OPEC members will cut 1.0 mil bpd and its non-OPEC allies (led by Russia) will cut by 0.5 mil bpd instead.

There is also some talk now that Russia is said to agree in principle on the need to cut but they are not in agreement with the figures above.
That will certainly make things interesting as we look towards OPEC+ talks tomorrow. For now, oil has basically given back all of its earlier gains with price falling to $46.60 after an initial spike to $47.40 levels on this headline here.

US 10-year yields slip back under 1% on the day

  
Analysis, Forex

USD/JPY keeping at lows as yields stay pressured

USD/JPY D1 05-03

The tug of war continues in the market over the past two days but in general, it isn’t looking to be a pretty picture for risk in trading today. European equities are creeping lower still with US futures down by more than 1%, while Treasury yields are slipping again.
The major currencies space is still looking rather tepid for the most part, with yen pairs being the only responsive ones. USD/JPY is now down to a session low of 107.08 as such.

Reminder: OPEC meeting begins today

  
Analysis, Crude
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Will Russia agree to the proposal to reduce output by more than 1 mil bpd?

That is the key question as all eyes turn towards Vienna over the next two days. As things stand, the expectation is that OPEC members – namely Saudi Arabia – will be pushing for output cuts of 1 mil bpd at the very least.

As mentioned yesterday, the usual case is that Russia always plays hard ball in the lead up to the meeting but then they always cave when it comes to making a decision.
So far, the market reaction is telling something similar despite murmurs of Russia rejecting the proposal of a 1.2 mil bpd output cut yesterday.

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Fed’s Bullard: Fed has plenty of flexibility

  
  Analysis
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Bullard is head of the St. Louis Fed, speaking with media:

  • says he will not prejudge outcome of the March policy meeting
  • says a barrier to cutting rates again in March is the action just taken, would need to cite data justifying a further rate reduction
  • says he does not want market to over focus on march meeting so there will not be much new information in hand
  • says fed has plenty of flexibility and has shown it can act between meetings in volatile situations
  • says he is optimistic the US can handle virus outbreak effectively
  • asked about effectiveness of Fed rate move, notes “a person can buy a car sitting in their kitchen” with online tools
  • says Fed has insured against a “fairly large outbreak,” further action by fed would require worse-than-expected virus spread
  • says Fed’s local business contacts will play a particularly important role in tracking economic impact of coronavirus

Bank of Canada cut rates 50 bps. Stocks soar. Biden Super Tuesday results help.

  
  Analysis
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Highlights for today’s near trading session:

  • The Bank of Canada cut the rates by 50 basis points. The expectations was for a 60% chance of a 50 basis point cut. As a result, the Canadian dollar weakened. The USDCAD went from a pre-decision low of around 1.3330, to a session high of 1.34308 (100 pip move). The move took the price above the swing highs from yesterday and the NY session high between 1.3090 to 1.30953. The prices since rotated back to the downside and afternoon trading and trades just above that swing high area.  a move below in the new day would next target the rising 100 hour moving average 1.3377
  • In the US the ADP employment report showed a bigger than expected gain of 183K versus 170K estimate. However the prior month was revised lower to 209K from 291K. The BLS will release the US job data on Friday with a change in nonfarm payroll of 175K estimate. It’s prior month came in at 225K. The revision down in the ADP report brings its number closer to the US number
  • Democratic nominee Biden was resurrected after the Super Tuesday primaries. Biden won 9 of the 12 contests, and took the lead over Bernie’s Sanders in the delegate vote. The big reversal helped to calm market fears about the implications of a Sanders nominee.
  • The US stocks surged with the Dow industrial average rising by over 1100 points on the day.  The Fed easing yesterday was not greeted with as much excitement, but Canada cut rates by 50 basis points as well and others were rumored to be moving in the cut direction.  That stimulus along with the Biden Super Tuesday showing, helped to send stocks soaring. In addition to the NASDAQ rising by over 1100 points or 4.4%, the S&P index is up over 120 points or 4.1% and the NASDAQ index is up 317 points or 3.66%. A huge day to the upside for US equities
  • European shares also close higher but off there high levels of the day. I would expect that all things being equal, they should play some catch up to the US afternoon gains
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