Archives of “November 9, 2021” day

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EIA cuts forecast for 2022 world oil demand (Another scamsters after Central Bankers )

  
Analysis, Crude

EIA estimates for oil demand

The EIA is out with his forecast for demand and supply.

  • Cut the forecast for 2022 world oil demand growth by 130,000 barrels per day. Now sees 3.35 million barrels per day year on year increase
  • raises forecast for 2021 world oil demand growth by 60,000 barrels per day. Now sees 5.11 million barrels per day year on year increase
  • lease 2022 world oil demand growth unchanged at 3.48 million barrels per day
  • leaves 2021 world oil demand growth unchanged at 5.05 million barrels per day
  • US crude output to rise 770,000 barrels per day to 11.9 million barrels per day in 2022 (versus increase of 710,000 barrels per day expected last month)
  • US liquid fuels consumption to rise 1.49 million barrels per day in 2021 (versus 1.48 million barrels per day increase forecast last month)
  • US liquid fuels consumption to rise 690,000 barrels per day in 2022 to 20.37 million barrels per day (versus 760,000 increase projected last month)
  • projects gasoline prices to rise to $3.00 per gallon in 2021 and $2.91 per gallon in 2022
  • expects gasoline prices higher than forecast last month

Treasury yields keep lower but trim early decline

  
  Analysis

10-year yields now down 1 bps to 1.486%

USGG10YR

At the low today, 10-year yields hit 1.458% and ran into another test of its 200-day moving average (green line) – a key level that is holding since the plunge in yields last week.
As we get into European trading, we’re seeing some of today’s drop trimmed with 2-year yields also now down by 1.8 bps to 0.43% from a low of 0.41% earlier.
With Team Transitory fighting back, the bond market is doing a bit of soul searching once again as shorts have been squeezed in the past two weeks or so.
I’d argue that we’re caught in a bit of a battle/debate right now when it comes to inflation and the bond market. While inflation pressures are set to push higher through to the opening stages of next year, the outlook for 2H 2022 is less certain.
Policymakers for one are adamant that inflation pressures will abate by then and there are certain quarters of the market who are also on that camp.
However, the question now is will we see rate hikes come along before inflation pressures start to settle down. And if so, will that help to snuff out real underlying inflation in the long run i.e. in the short-term, rates go up but in the long-term, rates may settle lower.
To me, that is the key point that market participants will have to figure out over the next few months and the thing here is that there aren’t going to be any easy answers.
As such, expect plenty more volatility to follow in rates and yields moving forward.

Fed report on near-term financial risks: virus, interest rates, China’s real estate sector

  
  Analysis

From the Federal Reserve’s semiannual financial stability report

Headlines via Reuters:

 

  •  finds measures of vulnerability for businesses and households have largely returned to pre-pandemic levels
  • says default rates on leveraged loans have fallen to below pre-pandemic levels as average credit quality improved
  • says leverage at banks and broker-dealers remained low, but still high at life insurance companies and “somewhat elevated” for hedge funds
  • overall credit quality of bank portfolios improved “broadly” over first half of year, though delinquency rates for commercial real estate loans and other pandemic affected industries “remained elevated”
  •  says little evidence of eroding mortgage underwriting standards or speculation as house prices continue to rise
  • funding risk low at banks though “structural vulnerabilities” persist at some money market funds and for stablecoins
  • liquidity risks at life insurers at post-2008 highs and increasing, with increased exposure to “risky and illiquid” assets
  • contacts cited worsening of virus, fast rise of interest rates and stress in china’s real estate sector among top near-term financial risks
  • says expiration of government support programs and pandemic uncertainty still pose significant risks to households
  • roughly 70% of market participants surveyed by fed cited “persistent inflationary pressures,” monetary tightening as a chief risk to financial stability, more than cited coronavirus

 

The Fed also pointed to meme stocks and the growing use of stablecoins as issues to attend to.

There is plenty to worry about (see points above) but equity markets continue to shrug off concerns. Bond markets at present are more volatile and may be indicating trouble ahead, but how many times have you heard this?

US : All major indices close higher once again

  
Analysis, US Market

S&P, NASDAQ, Dow and Russell 2000 all close at record levels

All major indices close higher once again and once again at record levels:

  • NASDAQ closes higher for the 11th straight day
  • Dow, Russell 2000 hit intraday record highs
  • S&P closes higher for the eighth consecutive day
  • NASDAQ index closed at a record high for the 44th times in 2021
  • S&P index closed at record high for the 65th time in 2021
  • Dow industrial average closed at a record high for the 44th time in 2021
A look at the major indices that the close shows:
  • Dow industrial average up 103.44 points or 0.28% at 36431.39 . The new intraday all time high price reached 36565.73
  • S&P index up 4.19 points or 0.09% at 4701.72.
  • NASDAQ index up 10.77 points or 0.07% at 15982.36
  • Russell 2000 up 5.66 points or 0.23% at 2442.74. The new intraday record high reached 2458.855
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