Archives of “August 2020” month

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US weekly oil inventories -1632K vs -2850K expected

  
Analysis, Crude
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Weekly US petroleum inventory data

  • Prior was -4512K
  • Gasoline -3322K vs -1000K expected
  • Distillates +152K vs -1200K expected
  • Refinery utilization -0.1% vs +0.3% expected
  • Production unchanged at 10.7 mbpd
API data late yesterday:
  • Crude -4264K
  • Gasoline +4991K
  • Distillates -964K
Crude rose about 20 cents on the headlines to $42.79 per barrel. The headline isn’t as bullish as anticipated but the gasoline drawdown was larger.
US weekly oil inventories
The OPEC JMMC meeting is also taking place right now with Russia’s Novak stressing the need for full compliance.

FOMC meeting minutes, what to expect later?

  
  Analysis
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Likely more noise more than anything else

Fed

The market will be keenly eyeing the release of the July FOMC meeting minutes later today but it is unlikely to tell us much that we don’t already know at the moment.

The Fed has acknowledged that the economic situation is starting to worsen a little and cast a bit of a dark cloud over the outlook in 2H 2020, considering the fact that the virus situation was escalating rather rapidly across the US last month.
If anything, I would say the minutes should just reaffirm that sentiment and also highlight that the Fed will still do whatever it takes to bolster the economy.
Other than that, there may be room to look out for potential policy changes/tweaks – possibly on future communication – but that is unlikely to offer much as the longer-term plan remains in tact (still just be mindful of this space in any case).
While the market may be looking to the minutes for further suggestions, it is not likely to change the themes that we have been seeing so far to start the week.
The softer outlook may be a signal for equities to pause after hitting all-time highs but for the dollar, election uncertainty and the stalemate on stimulus talks have been factors that are weighing on the currency; and those won’t be going away.
The dollar gave up on some key technical levels in trading yesterday but amid a tricky August so far, let’s see if sellers have the conviction to follow through ahead of the weekend.

What’s priced in for the US election

  
  Analysis
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It’s 76 days until the election

Biden and Trump picture
The deadlock in US economic stimulus negotiations highlights the political risk for the US coming out of the election. The sides simply can’t compromise.
At this point, you have to assume that most Americas have made up their minds about Trump, Biden and how they will vote.
In normal times, a Biden win would be the consensus. National polls in the past week show him from +4 to +11. Of course, these aren’t normal times and no one has forgotten the surprise on election night in 2016. Even with that, it’s worth remembering that Clinton won the popular vote by about what was expected, it was that a handful of states surprised. Her polling average was also only about +3% and she never reached this kind of spread.
Here’s how BMO sees it:

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WTO says indicators point to only partial uptick in world trade and output in Q3 2020

  
Analysis, Economy

Adds that the strength of any such recovery remains highly uncertain

Global
  • World merchandise trade likely registered a historic fall in Q2 2020
  • Additional indicators point to partial uptick in world trade, output in Q3 2020
  • But L-shaped trajectory – rather than V-shaped – cannot be ruled out
The WTO comments according to the latest reading of its goods trade barometer. That pretty much adds to some uncertainty surrounding the pace of sustainability of the recovery we have seen from May to July up until now.
There is undeniable evidence that the global situation has improved considerably since bottoming out in April but there are concerns that the recovery process may be running out of steam as “new normal” conditions prevail.
We’ll get a better idea on how this all plays out in the latter stages of Q3 and in Q4 but with global travel still not resuming, it is safe to assume that global economic conditions may run into some added headwinds sooner rather than later.

Reminder: OPEC+ JMMC meeting will take place later today

  
  Analysis
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The meeting is scheduled for 1400 GMT

But just take note that with all things OPEC+ related, there’s a likelihood it could be delayed for a few minutes or hours and what not. So, it will happen when it happens.

That said, the meeting today is likely just to reaffirm the bloc’s commitment to production cuts and to assess the compliance over the past two months.
The July compliance is slated to be at around 95% to 97% – down from 107% in June – but it shouldn’t be much of a problem all things considered, especially since oil prices are holding at more favourable levels (at least from the bloc’s perception).

Nikkei 225 closes higher by 0.26% at 23,110.61

  
Analysis, Global Indices

A mixed day for Asian equities

NKY 19-08

Japanese stocks are taking more positive cues from Wall Street yesterday, with the slight drop in the yen earlier on also helping exporter stocks a little.

Elsewhere, the Hang Seng and Shanghai Composite are both down by 0.8% and that is making for a bit more of a mixed mood despite record highs in US stocks yesterday.
US futures are up ~0.1% but is generally trading little changed as we look to get the European morning session underway. In the currencies space, the dollar is staying a little softer as the momentum from yesterday continues slightly.

Japan ruling party lawmaker says unlikely to propose ban or restriction on TikTok

  
  Analysis
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Comments by Japan ruling party lawmaker Nakayama

But says that a change of ownership of TikTok’s Japan operations is one possible way to address concerns over the app and whether or not it is safe to use.
A coordinated move by US and its allies against Chinese firms could draw further ire from China and that may see tensions escalate i.e. impact the risk mood. For now at least, it is still mostly the Trump administration coming down hard on TikTok and ByteDance.

German virus cases continue to climb, Merkel warns against further relaxing restrictions

  
  Analysis

Germany reports another 1,510 new coronavirus cases today, that is the highest daily count since the end of April

Merkel
That brings the total active cases across the country to ~13,700 – the most since 14 May. Meanwhile, another 7 deaths were reported and that brings the total tally on that front to 9,243 persons as of the latest reporting today.
The virus situation continues to progress in the wrong direction and RKI also made special mention of that in their report from yesterday with the 4-day virus reproduction rate (R-value) estimated at 1.06 and the 7-day R-value estimated at 1.05:

The reported R values has been around 1 or slightly above since mid-July 2020. According to current observation, this seems to be associated to a great extent with an increasing number of cases among travel returnees. Further it is also associated with a larger number of smaller outbreaks and case numbers in Germany overall, which have increased steadily in recent weeks since the relaxation of the measures.

This has also prompted German chancellor, Angela Merkel, to break her silence yesterday as she warned against further relaxing virus restrictions and called on citizens to respect social distancing and hygiene rules to limit the spread of the infection.
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