In today’s briefing:
- Three Risk-Off Signals Offset by One Risk-On Signal?
- Is Underlying Inflation Edging Higher, Lower or Flatlining?
- Iron Ore Tracker July 4th, 2024: Prices Rangebound, Iron Condors Anyone?
- EM Watch: A Chinese tale of two very different realities
- Japan Watch – Why BoJ Will NOT Intervene Anytime Soon
- [ETP 27/2024] Oil Prices Surge While Natural Gas Slides; Energy Majors’ Gains Slowdown
- CX Daily: China’s Push to Expand Its Carbon Market
Three Risk-Off Signals Offset by One Risk-On Signal?
- The three risk-off signals include the decline in the Bitcoin price, decline in the copper price, and the first day share price performances of recent Korean IPOs.
- These three risk-off signals are offset by one major risk-on signal which includes the U.S. Junk Bond-Treasury Yield spread.
- An important risk-off signal is the first day share price performances of major Korean IPOs after listing. We have started to see some weakness on this signal in July.
Is Underlying Inflation Edging Higher, Lower or Flatlining?
- Central bankers in advanced economies, while pausing, cutting and hiking, continue to debate underlying or trend inflation developments
- My estimate of underlying inflation for the G3 overall, which zeroes-in on the Most and More Persistent categories, trended lower recently
- The estimated level of underlying G3 inflation in May was approximately 1%-point above the pre-pandemic average
Iron Ore Tracker July 4th, 2024: Prices Rangebound, Iron Condors Anyone?
- Iron ore has remained rangebound between 95 and 130 USD/ton for three years, with cost-curve support kicking in on the higher end of the cost curve at around 100 USD/ton.
- Coking coal prices are expected to bounce due to the Anglo incident, and we believe the 65-62 spread will benefit, moving out of its mid-teens band.
- We like iron condors (set up details in the insight) and high-grade ore producers Rio Tinto Ltd (RIO AU), Vale (VALE US).
EM Watch: A Chinese tale of two very different realities
- Welcome to our weekly EM Watch series, where we focus on the diverging economic trends in China, where local consumption seems to be on the floor, while the export sector is still gaining momentum.
- Additionally, an interesting niche case in Panama requires some attention.
- The USDCNY pressures are more fierce than they have been at any time since the pandemic, and we are once again approaching the intervention zone around 7.30 in USDCNY.
Japan Watch – Why BoJ Will NOT Intervene Anytime Soon
- Recently, numerous JPY pairs have breached the levels where the BoJ / MoF intervened in April/May, prompting markets to wonder if (and when) authorities might step in again to support the Yen.
- The reaction in USDJPY post key events/meetings has been consistently uniform for the past 12-18 months.
- Markets build up a hawkish narrative prior to the event, only to unwind positions when the news turns out to be less hawkish than anticipated.
[ETP 27/2024] Oil Prices Surge While Natural Gas Slides; Energy Majors’ Gains Slowdown
- US crude oil inventory declined by 12.2 million barrels as of the week ending on 28/Jun, the biggest drawdown since July 2023.
- Henry Hub prices continued to decline from last week due to increased production and cooler weather forecasts.
- Saudi Aramco awarded over USD 25 billion in contracts for gas expansion. Goldman Sachs lowered its target price on Saudi Aramco but maintained its “Neutral” rating.
CX Daily: China’s Push to Expand Its Carbon Market
- Carbon / In Depth: China’s push to expand its carbon market Big changes are afoot for China’s three-year-old national carbon market.
- Kidnap /China calls for severe punishments after kidnapped victims murdered in Philippines
- Crypto /CSRC official likely used cryptocurrency to hide bribes, sources say
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