US dollar gives back much of its post-CPI gains

Commodity currencies lead the comeback

AUD, NZD and GBP are nearly back to pre-CPI levels against the US dollar.
Commodity currencies lead the comeback
The bond market has given back the CPI move and the S&P 500 is down just 2 points after futures fell as much as 21 on the headlines.
There’s an interplay between the Fed, other central banks, growth and inflation that’s tough to pin down at the moment. You can make the case that this is good for the reflation trade if you’re confident the Fed won’t hike early on the data.

IEA says oil market will tighten significantly if OPEC+ stalemate continues

IEA remarks in its latest update on the oil market

  • Overhang in global oil stocks built up last year has already been worked off
  • Preliminary Q3 data suggests that we could see the largest crude oil stock draw in at least a decade
  • Possibility of a market share battle by producers, looming over the market
  • Oil market to remain volatile until there is clarity on OPEC+ policy
That pretty much sums up the entirety of the oil market landscape but I think the risk pointed out on producers battling for market share is one that cannot be underestimated. The UAE already kicked things off and it may not take too long before others, especially Russia, would want a larger slice of the pie.

Not much urgency to resolve OPEC+ deadlock it would seem

The lack of a major reaction in the market is convincing the Saudi and UAE camps to stick with the standoff

A tweet by oil market correspondent, Amena Bakr:

There appears to be less urgency to unwind the opec plus deadlock, especially as prices didn’t dramatically move up. #OOTT #opec

And so the drama continues then. In any case, the bloc will be rolling over the 5.7 million bpd worth of output cuts going into August.

US FAA says production problem found in yet to be delivered Boeing 787 Dreamliners

The US Federal Aviation Administration has said that some undelivered Boeing 787 Dreamliners have a new manufacturing quality issue.

  • the issue is “near the nose on certain 787 Dreamliners” in undelivered airplanes
  • Boeing to fix
  • FAA will determine whether similar modifications should be made on 787s already in commercial service
Info comes via Reuters
Boeing 787 Dreamliner

36 of 51 economists polled expect the ECB to taper QE purchases after September

Via Reuters latest polling on expectations for what European Central Bank will do.

Info below via Reuters:
36 of 51 said the ECB would start tapering its Pandemic Emergency Purchase Programme (PEPP) after the September meeting
  • up from nearly 63% last month
  •  All of the 1.85 trillion euro PEPP envelope would be used up, according to the consensus view of 39 economists, with the lowest expectation pencilled in at 1.5 trillion euros
  • “Judging from the current monthly pace of purchases, our assumption of only a gradual reduction of this pace after September, and in the remaining time until March, the envelope will likely be used in full,” said Salomon Fiedler, European economist at Berenberg. “Furthermore, by September, the vaccination campaign in Europe should be all but complete … but if new variants are able to circumvent protection from current vaccines, renewed social distancing would once again put a damper on the economy.”
  • The ECB was expected to keep its deposit rate unchanged at -0.50% and refinancing rate at zero through to the end of next year.
  • Nearly 90% of economists, or 53 of 60, who answered another question said new COVID-19 variants were the biggest risk to the euro zone economy this year.
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