Archives of “New Zealand EM class electric multiple unit” tag

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FOMC responses coming in – “no surprises” #AnirudhSethi

  
  Analysis
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A summary of the main point Lloyds make about Wednesday’s Federal Open Market Committee

  • policy update contained no surprises.
  • left interest rates and its asset purchase target unchanged
  •  The Fed continues to promise that it stands ready to offer more support to the economy if warranted but there seems to be growing confidence that more action may not be needed. Nevertheless. any tightenng in monetary policy is still probably a very long way away and markets don’t expect an interest rate hike until 2024. 
More:
  • Recent US economic data has actually been mixed
  • the signs are that the vaccine rollout is increasing the Fed’s confidence that economic conditions will improve significantly later this year
  • Hopes of further fiscal stimulus from the Biden Administration probably have provided a further boost
On the ‘tapering’ of QE question, which some officials at the Fed have indicated may commence in 2021, Lloyds remind that Powell has been quick to “stamp on this idea” and reiterated the point again at his presser.
A summary of the main point Lloyds make about Wednesday's Federal Open Market Committee 

The short term lid on the US dollar

  
Analysis, Forex
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Comments from Westpac senior currency analyst Sean Callow quoted in a Reuters piece in response to Powell speaking on Thursday (US time).

  • “Shorter-term, Powell just put a lid on the US dollar”
  • “The baseline case is still for a substantial acceleration in the global economy, which historically has proven to be positive for most currencies against the USD, but I think there is potential to at least have a debate over whether us USD will be quite as weak as people expect. “

FT report that UK PM Johnson’s 3-year spending master plan to be ditched

  
  Analysis
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Financial Times say that UK Chancellor Sunak has told the PM that current plans should not go ahead due to the chaos of Covid-19.

A decision to scrap the three-year review in favour of a stopgap single-year settlement would be a setback for Mr Johnson, who saw the event as a chance to map out his priorities for a post-Covid world.
Johnson and Sunak have been discussing whether anything can be salvaged from binned plan.
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Brexit trade talks appear to be floundering. Coronavirus outbreak infections surging. Lockdown accelerating, and resisted.  Not a lot of good UK news about at present.

Reasons for the sliding oil price pile up

  
Analysis, Crude
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  • Crude oil prices collapsed, with Brent crude closing under USD40/bbl for the first time since June
  • risk-off tone across markets 
  • stronger USD headwinds
  • tone was set earlier this week after Saudi Aramco cut its prices to Asian refiners, suggesting demand is weak
  • Bloomberg survey showed that only four out of ten Asian refiners would be subsequently trying to buy more Saudi crude
  • Abu Dhabi National Oil Co also cut its prices on Tuesday
  • US refiners are also cutting output, as the summer driving season ends and inventories remain high
  • rising COVID-19 infections across the globe doesn’t bode well for demand in the short term
  • futures markets widening in the contango for both Brent and WTI to their widest levels since May

US election outcome poses potential downside risks to US equities

  
  Analysis
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Via HSBC, beginning with where we are at:
  • latest national opinion polls show Senator Joe Biden maintaining a healthy lead over President Trump
  • although lower than the double-digit gap reached in late June
  • Biden’s strong polling performance has coincided with a period of high US unemployment as the country grapples with the Covid-19 pandemic and a period of heightened social tensions earlier this summer
But, that could change:
  • A number of factors could materially shift either candidate’s standing in the coming weeks. 
  • Positive for Trump would be developments that lead to a faster economic recovery. This may include the potential for the pandemic to subside or further progress to be made with treatments and/or vaccines. Congress passing a new stimulus package that includes an extension to the unemployment insurance top-up will also be considered important. 
  • Other factors complicate the picture. There is uncertainty about the impact of increased mail-in voting due to the pandemic. Meanwhile, the US Electoral College system places greater importance on ‘battleground states’ to the final result, making national polls a less useful predictor. In the majority of these states, Biden is forecast to do worse than at the national level.
For markets:
  • The outcome of the election poses some potential downside risks to US equity markets. 
  • These include the possibility of a divided government and “deadlock” over fiscal policy support, while Biden may implement higher corporate taxes. 
  • For the time being, we maintain our overweight view on US equities as the “swoosh” economic recovery remains in play.”

US storms – Oil producers on Saturday shut 13% of crude oil production ahead of Laura and Marco

  
Analysis, Crude
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Weekend news on industry response to approach of Gulf storms, posting ICYMI:

Via Reuters:
  • Producers halted 240,785 barrels per day of oil production and 119 million cubic feet per day of natural gas output before noon on Saturday, said regulator U.S. Bureau of Safety and Environmental Enforcement.
  • Crews were evacuated from six production and four drilling rigs. Another seven drilling vessels were moved out of the storms’ paths

Chinese officials are clamping down on speculative stock and metal trading – fearful of backlash if prices drop

  
  Analysis
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The Nikkei has the piece on Chinese officials seeking to calm investor fervour:

  • on fears that investor anger in the wake of any financial collapse would stoke discontent with the government
  • Industrial and Commercial Bank of China, a major state-owned lender, notified customers at the end of July that it would cease setting up new accounts for financial products linked to platinum and palladium prices
  • Other banks have taken similar action
  • “This is what the authorities wanted,” said a sales manager at a large bank
Meanwhile, on the other side of the world …
The Nikkei has the piece on Chinese officials seeking to calm investor fervour:

FT report: China cautious on hitting back at US companies after Huawei sanctions

  
  Analysis
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The Financial Times writes that despite mounting political pressure to unveil commensurate restrictions on US businesses in China, Beijing has historically been reluctant to retaliate. 

Analysts think officials will continue to hold back, as they are reluctant to upset the economic benefits and innovation US companies bring to China.
The US administrations targeting of China’s biggest technology groups incldueds moves against:
  • ByteDance
  • Tencent
  • as well as Huawei
Link to FT is here (may be gated).  The FT cite analysts (named in the piece) for the opinions.
If they are right perhaps US-China relations will not chill much further after all.
The Financial Times writes that despite mounting political pressure to unveil commensurate restrictions on US businesses in China, Beijing has historically been reluctant to retaliate. 

Brexit talks look set to hit another roadblock, this time over truck access to the EU

  
  Analysis
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The Financial Times report that Brexit trade talks set to stall again over British truckers’ EU access

  • Brussels warns that UK demands on haulage are too close to single-market rights

Brussels has rejected the UK’s opening demands for continued wide-ranging access to the EU for British truckers
This is just one of the points upon which negotiations will stall. Fishing rights, state subsidies are others. Talks are this week between the two sides.
The Financial Times report that Brexit trade talks set to stall again over British truckers' EU accessBrussels warns that UK demands on haulage are too close to single-market rights

UK press (Times) report: US sends stealth bombers to counter Chinese threat

  
Analysis, Politics
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UK newspaper The Times with the info on US military assets deployed

  • Three American B-2 stealth bombers have arrived in the Indian Ocean island of Diego Garcia on the eve of Chinese live-firing naval exercises north of Taiwan.
  • It is the first time the nuclear-capable strategic bombers have been sent to the remote island since 2016, in an indication of the growing concern about China’s intentions towards Taiwan.
  • The bombers flew across the Pacific from Whiteman air force base in Missouri to land at Diego Garcia, part of the British Indian Ocean Territory. With their advanced stealth technology, the B-2s can penetrate enemy territory without alerting air-defence radars.
Link is here, Times (may be gated)
Seems rather a long way away:
UK newspaper The Times with the info on US military assets deployed
Taiwan escalation would be likely risk negative. This seems a bit of a small step. Let’s hope it goes no further (probably a forlorn hope).
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