In today’s briefing:
- Oil Price Surge and Macro: Are We Near A Turning Point?
- Monetary Policy: Asia Will Not Tighten in Lockstep with the Fed
- Contagion Risks from Russia to Other EM Currencies
- CX Daily: The Murky World of High-Frequency Futures Trading in China
- CX Daily: China’s CIPS Won’t Rescue Russian Banks from SWIFT Ban
- EA: Inflation Trend Dominates Forecasts
Oil Price Surge and Macro: Are We Near A Turning Point?
- As the supply picture remains stark, will buyers balk at higher prices? The prospect of stringent financial sanctions has left Russian crude in a limbo.
- Higher oil prices will test the capital discipline of US shale producers and the restraint of OPEC+, which is still forecasting a surplus in global supplies.
- Asia will not be spared, but some will be hit harder than others via higher inflation and widening imports.
Monetary Policy: Asia Will Not Tighten in Lockstep with the Fed
- There are 3 reasons for Asian central banks to commence tightening of monetary policy soon.
- Inflation risks are rising and there are signs of financial imbalances or asset price bubbles beginning to emerge.
- The region also cannot be too far behind global central banks which are likely to start normalising monetary policy as soon as March for the Fed.
Contagion Risks from Russia to Other EM Currencies
- With Russia invading Ukraine, my view of the dollar remaining strong and possibly appreciating further in the near term is playing out.
- EM currencies have weathered the spillover from Russia and dollar strengthening well so far, but this may be about to change as their (negative) beta to the dollar has increased.
- Beyond the near term, the outlook for the dollar and EM currencies has become hazy given the uncertainty emanating from Russia’s invasion and the fallout of the sanctions.
CX Daily: The Murky World of High-Frequency Futures Trading in China
In Depth: The murky world of high-frequency futures trading in China
Moldova takes in Chinese students from neighboring Ukraine as war rages
China manufacturing recovers after weak January, Caixin PMI shows
CX Daily: China’s CIPS Won’t Rescue Russian Banks from SWIFT Ban
In Depth: China’s fintech plan part two puts data, risk control in driving seat
China considers ‘China-style’ strategy to coexist with Covid, top disease experts say
Analysis: China’s CIPS won’t rescue Russian banks from SWIFT ban
EA: Inflation Trend Dominates Forecasts
- EA inflation’s rudely strong trend continued in Feb-22 with a 73bp rise to 5.8%. That was 0.3pp above our forecast, which was already 0.2pp above consensus.
- Upside news remained broad-based across countries and types. Repeating the consistent forecast drift over the past several months implies inflation over 6.2% in March.
- Although that is well above our current forecast, the shift in core inflationary pressures causes a substantial upside bias as prices get pulled back up towards their equilibrium.
Before it’s here, it’s on Smartkarma
