Weekly EIA petroleum inventories for the week ending June 18, 2021:
Prior was -7355K
Gasoline -2930K vs +1050K exp
Distillates +1754K vs +1000K exp
Refinery utilization -0.4% vs +0.5% exp
API data released late yesterday:
The surprise in this report is the drawdown in gasoline inventories. The headline was foreshadowed by yesterday’s API numbers so it wasn’t a big surprise but gasoline tightening up points to strong driving demand.
The JPY weakness helping push USDJPY up through 111.00 and US 10 year yields snugged up to 1.50%. The next major test is up at 111.50 with some heavy daily resistance clustering up there. US strength should remain heading into Friday on expectations of more inflationary signs from the US PCE deflator.
In the last Fed tapering ‘tantrum’ of 2013 gold lost about 20% of its value. Would have expected to see gold etf holdings to fall more quickly than the ETF holdings charts indicate. Levels steady at around 101.052M.
I still favour a sell on rallies up to gold spot around $1830.
One area that US inflation is being keenly felt is in the used cars sector. Fed’s Powell expects this to be temporary and for supply/chip shortages to be rectified and for that market to calm down.
So how hot is it? Well some used cars are trading for more than their new price!
According to Bloomberg a typical 2019 Toyota Tacoma SR double cab pickup was just under $29,000. Two years later, the same car is going to dealers for $30,000 and then sold on to consumers for $33,0000. According to Black Book, which tracks car and truck data, used cars have climber 30% this year.
China Securities Journal with the piece, a note on China should be alert to risks regarding yuan depreciation.
Yuan has fallen in the past week or two (chart below is offshore yuan, CNH … a rising USD/CNH is a depreciating CNH) but its difficult to think this has Chinese authorities too concerned, its barely retraced some of its 2020 gains. Still, maybe its a signal the recent fall will not be allowed to accelerate.