Daily Brief Macro: Global Commodities: The art of keeping up with yesterday and avoiding tomorrow and more

• Output hikes announced in fourth quarter
• Various commodities including copper, natural gas, and grain oilseeds have experienced sharp declines
• Oil prices influenced by economic indicators, strong underlying demand, and declining global visible oil inventories

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• Happy Sunday, folks—if you can stay upbeat in the current market environment, that is.
• We have had September 100% spot on, and the developments late on Friday support our notion that a dash for USD cash will arrive through the month.
• The USD started rebounding alongside the sell-off in commodities and risk assets, following Waller’s appearance during the FOMC Q&A.

• Happy Friday from Copenhagen! This week has revolved around the NFP report from an allocation perspective, with markets being hypersensitive to employment-related data throughout.
• ISM Employment and Job Openings have once again become major players on the economic calendar.
• Today’s NFP report was dovish overall, coming in below the consensus of 165k at 142k, with the July number revised down by 25k, offering little in the way of positive signs.

• Conventional wisdom suggests presidential debates don’t influence most voters.
• In the current unique election cycle, polls indicate otherwise.
• Both candidates have a lot at stake in the upcoming 10 September debate.

• We expect August’s CPI to increase by 0.2% both overall and ex food and energy, with the respective gains before rounding being 0.18% and 0.21%.
• Such an ex food and energy rate would be slightly stronger before rounding  than in the preceding three months, though not strong enough to trouble the FOMC.
• We expect a slightly firmer ex food and energy rate, because some components are unlikely to be quite as soft as in recent months.

• The past week saw insights on Erajaya Swasembada (ERAA IJ), Jardine Matheson Holdings (JM SP), and a shortlist of high-conviction buys in the Philippines. 
• There was also a macro insight on Malaysia and CrossASEAN Ground Zero looking at OVO and Superbank, SCG Packaging (SCGP TB), GoTo, and Telekomunikasi Indonesia (TLKM IJ).
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.

• Markets experienced significant volatility in response to comments from New York Fed presidents and Governor Waller, resulting in pricing of around 30 basis points for the September meeting
• Labor market data suggests softening, with revisions showing a decline in private sector payroll growth, indicating a shift towards imminent Fed easing
• Opportunities in Treasuries lie in steepeners, with a focus on front end steepening and potential for further broadening of the steepening trend as the Fed moves towards easing.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Jul’24 was the weakest month for NFPs, and Jun-Aug’24 the weakest 3-month period, since Dec’20. Sahm Rule predicts recession: unemployment rate (averaging 4.2% Jun-Aug’24) is 0.57pp above 12m low (Nov’23-Jan’24).
• ISM manufacturing PMI has been below 50 for 11 of past 12 months, with new orders slumping anew in the past 5 months — suggesting a sharp cyclical downturn ahead.
• Core PCE inflation is 2.6%YoY (and just below 2%MoM annualized) in May-Jul’24. That’s enough to ensure a 25bp cut next week. Recession risk necessitates 50bp cut, but it won’t happen. 

• US oil and gas rig count fell by one to 582 for the week ending 06/Sep, marking a decline in rig count for the fourth consecutive week.
• The US oil rig count is unchanged at 483 for the third consecutive week. Meanwhile, gas rigs declined by one to 94, marking their lowest level since April 2021.
• For the week ending 30/Aug, US crude oil production stayed flat WoW at 13.3m bpd. In August, production reached a record high of 13.4m bpd on two occasions.

• Since our latest economic outlook report, the U.S. economy has shown signs of softening, particularly in the labor market, and financial markets have experienced increased volatility.
• While concerns about an imminent recession are overstated, we do anticipate a gradual slowdown in economic activity as we approach 2025.
• This slowdown is likely to be driven by elevated prices and interest rates of the past two years, which will weigh on private sector activity and lead households to become more cautious in their spending.