Daily Brief Macro: Weather Favorable For Rubber In Thailand But Can Trouble Indonesia and more

• Thailand likely to receive less rains in the coming one-month period  
• Indonesia, Vietnam, Cambodia likely to have above normal rains  
• WMO predicts 60% chances of La Nina developing

• Before we get to Trump, we need to quickly discuss OPEC and their recent cut in demand forecasts.
• This reduction hints at an unwillingness to increase production in the near future.
• Saudi Arabia is key here, as it holds the largest excess capacity, and a production hike from them could swing the market and send prices below $50 USD in the blink of an eye.

• US inflation’s unsurprising October print should reassure market expectations for a December rate cut after pricing became overextended by post-election exuberance.
• Although the seasonally adjusted rates annualised above the target again, unadjusted rates are trending at dovishly subdued levels, with no headline exceptions since April.
• These numbers are arguably old news but don’t discourage a December cut. The shocks from Trump policies won’t hit until 2025 and pre-empting them seems too presumptive.

• We’re at a critical juncture in sovereign bond markets, with liquidity running razor-thin and the game changing fast.
• German Bunds, traditionally rock-solid, are now trading through swaps and nearing zero on cross-currency swaps (ESTRON/SOFR) – a first in modern market history.
• The takeaway? Major central banks, especially the ECB, are pressing too hard on QT, and the markets are about to hit back hard if they don’t ease up soon.

• Discussion on US elections and Fed policy implications
• Impact of policy uncertainty on calendar spreads and wild card options
• Investor positioning and its influence on various bond contracts

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