FICC
One macro framework for rates, FX, credit, and commodities, helping investors connect cross-market signals and position with clarity and conviction.
Global oil demand growth is tracking with our estimate of ~ 1.8mm b/d for this year. Supply discipline is being maintained by OPEC 2.0, where the core (KSA and the UAE) and Russia have reduced production by ~ 240k b/d yoy in 1H23. In addition, KSA extended its unilateral production cut of 1mm b/d from July into August. We expect inventory draws in 2H23 as supply stays below demand. Our Brent forecast remains unchanged at $92/bbl this year, and $120/bbl next year. We remain long the COMT and XOP ETFs.
An outlook for inflation and Fed policy following this morning’s CPI report.
A perspective on the recent increase in US bond yields and this morning’s employment report.
In this short weekly report, we review some of the most common questions clients asked us in the last few weeks.
Markets continue to be tossed to and fro by central-bank policy, and risks of higher commodity prices. These are due to fiscal stimulus and exogenous weather and war-related risk, which could send food and energy prices higher this winter. We remain long gold outright, energy and metals producers via the XOP, XME and PICK ETFs, direct commodity exposure via the COMT ETF, and futures exposure to backwardation in copper (long 4Q23 copper futures vs. short 4Q24 copper futures).
This report reviews our key calls for major currencies, in light of recent data releases.
A look at how US bond yields responded to yesterday’s strong economic data and this morning’s soft inflation print.
China’s economic and diplomatic interests in the GCC region will expand, as will its military presence. Whether or not this stabilizes the region is yet to be determined, particularly if tensions in the South China Sea and other international waters traversed by both the US and China escalate. Underlying risk in energy markets will remain elevated. We remain bullish energy generally, and continue to favor equity ETF exposure to energy (XOP and XME), and commodity exposure via the COMT ETF.
