Archives of “Economy” tag

rss

Platts on the oil price impact of the Saudi attack

  
  Analysis
#  #  #  #  #
Via Platts now, in brief from their analysis:
  • Attacks increases concerns on about supply security in the Middle East
  • Oil price risk premium should heighten
  • sudden change in geopolitical risk warrants elimination of the $5-10 a barrel discount on bearish sentiment and also adds potential $5-10 a barrel premium to account for threats to supply, sudden elimination of spare capacity
  • prices are likely to break out of the current $55-65 a barrel options range
  • test high $70s
  • could move higher still if Saudi output is curtailed for a more substantial period
—-
Note, exports from Saudi are expected to remain around normal levels this week as inventory is drawn upon. Evidence of prolonged curtailment of supply due to damage to production facilities is what to watch for.
ICYMI, oil prices will jump at the open on the attacks over the weekend:

Fitch reports on Chinese tariffs impacting US agriculture

  
  Analysis
#  #  #  #  #  #  #  #  #

Chinese tariffs stinging farmers

Chinese tariffs stinging farmers
  • Chinese tariffs on US agricultural imports escalate trade related risks to US farm sector , which is experiencing falling sales and land values
  • Ongoing trade wars impact equipment loan and lease ABS collateral performance
  • Ongoing trade wars have placed greater pressure on already stressed US agricultural sector
Biting tariffs will get Trump to the dealing table quicker than anything else, I would say. He won’t want to see tariffs stinging the US.

Global trade uncertainties 10 times higher than previous peak levels: IMF

  
  Analysis
#  #  #  #  #  #  #  #

Concerns about global trade have reached nearly 10 times the peaks seen in the previous two decades, the International Monetary Fund (IMF) has said.

“Globally, the trade policy uncertainty index is rising sharply, having been stable at low levels for about 20 years,” it said in a blogpost.

“The World Trade Uncertainty index jumped in the past year 10-fold from previously recorded highs as the US-China trade war escalated,” said the blogpost written by Hites Ahir, Nicholas Bloom and Davide Furceri.

The Americas and the Asia Pacific are most affected by concerns about the US-China trade war while Africa is least affected, the IMF said in a new index aimed at quantifying trade uncertainty.

The index is based on reports from the Economist Intelligence Unit (EIU) dating back to 1996 and borrows from the methodology used in the IMF’s own World Uncertainty Index.

To calculate the new gauge, IMF researchers counted how often the word ‘uncertainty’ appears in the EIU reports near terms such as ‘tariffs,’ ‘protectionism’ or ‘trade.’ (more…)

China trade balance data for August – surplus comes in below median estimate

  
Analysis, Economy
#  #  #  #  #  #

Trade balance data out from China Sunday will not be viewed as a positive input for China-related risk markets.

The counter to this is, of course, the expectation of stimulus from China, some of which we have already indeed seen (eg. only on Friday we got news of  the cut to the RRR) and more is forecast.

Yuan terms trade balance data

Surplus for the trade balance of 239.60bn … miss

  • expected CNY 299.3bn, prior was CNY 310.26bn

Exports +2.6% y/y … miss … slowing global growth and US tariffs key points for exports missing

  • expected +6.3%, prior was +10.3%

Imports -2.6% y/y  – falling imports are often associated with domestic economic weakness -this result not as sharp a fall as expected.

  • expected -3.1%, prior was +0.4%

USD terms

China trade balance: $+34.84

  • expected $44.3bn, prior was $44.58bn

(more…)

Berkshire taps Japan’s hunger for yields with $4bn bond debut

  
  Analysis
#  #  #  #  #  #  #  #  #

Warren Buffett’s Berkshire Hathaway headlined a record day in Japan’s bond market Friday by setting the terms on a 430 billion yen ($4 billion) offering, the biggest yen-denominated issue ever by a foreign multinational.

The U.S. investment group is selling five-, seven-, 10-, 15-, 20- and 30-year bonds.

The biggest chunk, 146.5 billion yen in 10-year debt, carries a 0.44% coupon — an attractive yield at a time when Japan’s benchmark long-term interest rate languishes below zero.

Banks, insurers, asset managers and other investors flocked to Berkshire’s offering, which falls under a global yen bond heading that allows foreign buyers to participate. Debt offerings under this framework have been growing gradually, with such big names as Apple, Starbucks, and Procter & Gamble joining in, and both Wall Street and Japanese financial institutions are pitching bond floats.

The success of the record debt sale could embolden other multinationals to raise capital in Japan’s bond market, where most yen-denominated offerings by foreign issuers have been small.

Berkshire’s AA issuer rating from S&P Global Ratings puts it slightly above the AA- of Japanese blue chip Toyota Motor. (more…)

US stocks break out of recent ranges with a big move higher

  
Analysis, US Market
#  #  #  #  #  #

Dow and S&P up for the 5th time in 6 trading days

The US major indices all broke above recent up and down trading ranges, and above their 50 day MAs as well.  The major pairs are each up over 1.30%. Big day for equities.

The final numbers are showing:

  • S&P index up 38.16 points or 1.30% to 2975.95. The day moving average is down at 2945.21.
  • NASDAQ index up 139.94 points or 1.75% at 8116.82. The 50 day moving average is down at 8047.98.
  • Dow is up 371.93 points or 1.41% at 26727.40. The 50 day moving average is down at 26563.34.
Apart from the UK’s FTSE which fell by -0.55% on the day on the back of a continuation of the upward momentum in the GBP, the other major indices traded above the 0.0% line for all of the day.   The biggest gainer was the Russell 2000 index of small cap stocks which rose by 1.86%. The NASDAQ composite index tacked on another 1.75% gain after rising by nearly 2% at the highs.

A couple of Brexit scenarios to ponder (and what they mean for EUR/GBP)

  
Analysis, Forex
#  #  #  #  #  #  #  #  #

An overnight bank note (Rabo) on Brexit and euro / sterling

(in brief, and note this prior to Wednesday’s UK voting)
If legislation to rule out a no deal Brexit is rushed through parliament, the pound can be expected to rise. If it were decided that the Brexit deadline were to be extended but that the legal default position of the UK remains that a no deal Brexit could still take place at a future date, GBP may also rise, but by a lesser amount – since kicking the can down the road is not a solution.
  • In this scenario we would expect EUR/GBP to be trading in the 0.90 area on a 1 to 3 month horizon.
If a no deal Brexit is ruled out will would expect EUR/GBP to clamber back towards the 0.86 area in 3 months. 
If fresh legislation is not passed and the UK remains on course for a no deal Brexit in October we would expect EUR/GBP to rise firstly back towards the recent high in the 0.9325 area. 
How high EUR/GBP can go may then depend on whether the EU summit in mid-October brings any compromises.” “On a no deal Brexit on October 31, we expect EUR/GBP to rise towards parity.

US stocks close near session highs for the day

  
Analysis, US Market
#  #  #  #  #  #  #  #

Nasdaq up 1.30%.  S&P up 1.08%

The US stocks are closing not far off the highs for the day, with the Nasdaq leading the way higher. Ever sector in the S&P was higher.  Dow closes higher for the 4th time in 5 sesssions.
The final numbers are showing:
  • The S&P index closed up 31.51 points or 1.08% at 2937.78
  • The Nasdaq index closed up 102.72 points or 1.30% at 7976.87
  • The Dow index closed up 237.45 points or 0.91% at 26355.42
The % changes and ranges are outlined below. Yesterday, the indexes in US and Europe traded below the 0% line for all of the day. Today, the major indices all traded above the 0.0% line alll day.   All indices opened higher and traded higher.

Solid up day for the European stock indices today

  
Analysis, Global Indices
#  #  #  #  #  #  #

Major indices are all in the black

The major European stock indices are ending the day with solid gains, helped by decreased attention in Hong Kong, increasing hope for US/China relations, less no-deal risk for the UK, and more dovish Fed officials (the ECB is set to act in September too).
The provisional closes are showing:
  • German DAX, +0.94%
  • France’s CAC, +1.21%
  • UK’s FTSE, +0.60%
  • Spains Ibex, +0.61%
  • Italy’s FTSE MIB, +1.58%
In the benchmark 10 year note sector in Europe, yields are higher as well (with the exception of Italy).
Major indices are all in the blackIn other markets as London/European traders look to exit:
  • spot gold is near unchanged at $1547. The high price reached $1550.23. The low extended to $1533.93
  • WTI crude oil futures are up $2.25 or 4.17% at $56.17. That is near the high price for the day at $56.22. The US impose tighter sanctions on Iran today.
In the US stock market major indices are enjoying solid gains as well.  A snapshot of the market currently shows:
  • S&P index 27 points or 0.93% at 2933.22
  • NASDAQ composite index is up 84 points or 1.07% at 7958.13
  • Dow Jones industrial average is up 212 points or 0.81% at 26329.70
US yields have come off high levels and trade mixed with the longer and up marginally and the shorter end unchanged or down marginally:
US yields are trading mixedA snapshot of the forex market shows that the GBP is still the strongest of the majors (but off earlier higher levels). The JPY and USD remain the weakest.  The CAD  has gotten stronger on stronger oil and a was dovish Bank of Canada statement.

US stocks opened lower and closed lower

  
Analysis, US Market
#  #  #  #  #  #  #  #

…but off lows for the day

The US major stock indices opened lower and closed lower. The low for the Dow reached -1.61%. For the Nasdaq it reached -1.45%. For the S&P it fell by as much as -1.18%.  However, the indices did recover some of those declines by the close.
The final numbers are showing:
  • The S&P fell -20.02 points or -0.69% at 2906.27
  • The Nasdaq fell -88.72 points or -1.11% at 7874.16
  • The Dow fell -285.26 points or -1.08% at 26118
Below are the % ranges for the North American and European markets for the day.  All major indices are ending lower.
Go to top