In today’s briefing:
- Seeking Shelter in Gold on Rising Geopolitical Risks
- Great Game – Calm Before the Storm?
- Energy Cable #43: Price Resilience Despite Warm Weather
- ECB & Fed Watch: Closing in on ECB Rate Cuts, While the Fed Is Not Done Hiking
- UK: Hawkish Correction to Jobs Data
- Macro Nugget: Why Argentina Won’t Dollarise
- ECB Bank Loan Survey Nugget: Tight Supply and Even Less Demand
- CX Daily: Modi Steers India’s Relationship With Russia Through Storm of Ukraine War
Seeking Shelter in Gold on Rising Geopolitical Risks
- Rising geopolitical tensions have driven gold prices 9% higher over the last 2 weeks. Risk of escalation provides further upside to gold prices.
- Gold is trading at a key psychological price level of $2,000/oz with a bullish momentum. Previous rallies were rejected from the price level of $2,100/oz.
- Consumption is expected to rise in India and China due to higher seasonal consumption in India and fading domestic premium in China. But, higher prices remain a drag.
Great Game – Calm Before the Storm?
- Welcome to this week’s Great Game, which is obviously focused on the ongoing Israel/Gaza war.
- In this piece we answer three key questions in geopolitics right now:
- 1) What on earth are Chinese warships doing in the Middle East? 2) Why haven’t Israel invaded Gaza yet and 3) Have Russia re-gained the initiative?
Energy Cable #43: Price Resilience Despite Warm Weather
- Key takeaways: Temperatures in Europe and the US are above mean levels, but only prices in the US have reacted (materially)
- No signs of actual weak gasoline demand
- New sanctions on Russia and Iran on the cards?
ECB & Fed Watch: Closing in on ECB Rate Cuts, While the Fed Is Not Done Hiking
- In this piece, we are going to compare the ECB and the Fed case systemically on a set of important parameters to ultimately conclude with our base-case and suggested allocations on the back of it.
- We will assess the cases on: 1) Inflation 2) Growth 3) Labour 4) Liquidity
- Inflation Watch: The ECB is realistically much closer to claiming victory. As we have noted since the early summer, we find the probability of sub-2% inflation in the Euro area much larger than in the US.
UK: Hawkish Correction to Jobs Data
- Postponed UK labour market data used payroll data to reduce residual seasonality, but only in the latest two months. It revised away last month’s spurious unemployment rise.
- The preceding 0.4pp cumulative rise remains as revisions were explicitly time-limited. However, that change still doesn’t look genuine and now seems unlikely to survive.
- Monetary policymakers now face a tighter labour market with less likelihood that it is loosening significantly. Excess demand and inflationary pressures justify a rate hike.
Macro Nugget: Why Argentina Won’t Dollarise
- Yesterday marked the first round of the Argentine Presidential election, and the results were as follows: Sergio Massa secured 36.5% of the votes, surpassing Javier Milei’s 30.0% and Patricia Bullrich’s 23.9%.
- In the upcoming three weeks, the decision will largely rest with Bullrich’s supporters, who must choose between Massa and Milei.
- Milei has obviously been the media darling lately with his boisterous promises of rooting out close to all state departments and exchange the hyperinflated Peso with the USD.
ECB Bank Loan Survey Nugget: Tight Supply and Even Less Demand
- The net tightening of credit standards amongst Euro Area banks moderated slightly compared with the previous quarter, but the main impact of the tightening still stems from banks’ risk perception.
- Banks’ reportedly still see risks linked to a gloomy economic outlook (as do we), and they also remain attentive to company- and situation specific risk when providing or extending credit.
- All adding to the tightening lending standards.
CX Daily: Modi Steers India’s Relationship With Russia Through Storm of Ukraine War
- India / Cover Story: Modi steers India’s relationship with Russia through storm of Ukraine war
- CICC /: Top Chinese investment bank CICC picks new boss
Corruption /: Ex-executive of Shanghai bourse accused of bribery and fake divorce
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