WTI down 70-cents to $69.58
Chatter about a resuming Iran nuclear talks is combining with negative risk sentiment to weigh on oil.
WTI fell through yesterday’s low down to $69.58 as it eats further into last week’s gains.
The two-hour chart now isn’t looking great with a minor head and dhoulders top in place targeting a fall back to last week’s lows.
Oil — like everything else — is now looking to China for a read through on global GDP. In the shorter term though, it will be down to the Fed and PBOC to signal what’s next for markets.
OECD chief economist, Laurence Boone, remarks
- The broader impact from Evergrande should be fairly limited with the exception of some specialist companies
If China really wants to, they could easily turn this situation around but it’s not exactly about that right now. The times are changing and Evergrande is but an example of that.
Chinese authorities could provide some relief to the market as a whole but I don’t expect them to do much to bailout Evergrande at this point. A statement is being made and it’s best the market listens because there’s going to be more testing times to follow.
10-year Treasury yields now back up by over 3 bps to 1.34% today
That pares some of the drop in yields from yesterday but in the grand scheme of things, there just isn’t anything significant in the back and forth motion in Treasuries over the past few weeks – despite more significant moves elsewhere in the market.
10-year yields are back up by a little over 3 bps to 1.34% but it isn’t hinting at much as the range since July and August continues to hold.
Until a technical breakout takes place, there isn’t anything particularly significant or meaningful to extrapolate from the fluctuations in the bond market – for the most part.
For now, it only serves as a general risk sentiment indicator while not providing any major leads as to the general market landscape when digesting the key developments as of late i.e. Fed taper expectations, COVID-19/global growth worries, inflation, and China.
Adds that OPEC is not concerned about a supply surplus next year
After the decision to stick with the status quo at the start of the month, I don’t think anyone expects otherwise with OPEC+ for the remainder of the year.
COVID-19 risks are becoming less prominent and the immediate threat to oil prices currently is risk sentiment as the market is honed in on the situation in China.