Bonds

Suderman Says that lingering uneasiness over bank solvency and this week’s Federal Reserve meeting worried traders overnight as Wall Street remains in an overall “risk-off” mode. Banking stocks largely led the way lower on fears of a broader contagion risk within the sector.

Natalie Scott-Gray highlights Indonesia's ‘grand strategy’ to support its domestic refining industries, limiting the export of unprocessed raw materials – most notably nickel – and increasing the shipment of refined products which benefit local industry.

The oil market has been extremely volatile, tracking a volatile equity market. Crude oil was down 5% today, with WTI at $66.45. WTI prices have dropped to their lowest price since December 2021, losing over $14 per barrel in 2 weeks. A long-term bull run is still on the cards. However, current market dynamics point to continued downward pressure on prices.

Suderman says that equity markets fell again today, with bank shares of First Republic and Credit Suisse leading the way lower. Investor focus remains on interest rates and the outside markets, especially now with the Fed meeting next week and expectations for rate hikes scaled back.

Natalie Scott-Gray discusses the importance of Peru’s reopening of key mining corridor after a period of significant political volatility: the countries mines are responsible for 12% of global copper output, or 2.8 million tons in 2023; in addition, Peru produces significant lead, zinc, tin, and silver.

Suderman says that the European Central Bank hiked its benchmark interest rate by 50 basis points as expected this morning but gave no signals about future moves. US economic data remains resilient. Markets welcomed continued efforts to control inflation, and another bank bailout (but bigger). How the Fed responds with rate rises is a key focus.

Natalie Scott-Gray discusses risks of Russian growing exclusion from global Aluminium markets, specifically Glencore’s decision to cut ties in 2024, and President Biden’s policy focus.

Arlan Suderman discusses his belief that the greater threat to our economy is for inflation to become deeply engrained, if the Fed backs off its focus on this problem, setting in motion a series of events that ends up creating long-term pain for everyone.

Arlan Suderman argues that Fed Chair Powell left market’s guessing on the path for rate hikes, citing data as the main determinant. Markets were weaker on his testimony, and the dollar continued to be strong, as jobs data continues to point to inflation risks.

Interest rate fears hit the gold price, with Fed Chairman Powell ramping up rate hike expectations. It’s commonly believed that gold prices have an inverse relationship with interest rates,. On the other hand, continuing geopolitical tensions with respect to Russia and China are supportive of the gold price, a haven in uncertain times.

Our oil team argue that traders grew cautious yesterday after Jerome Powell’s testimony in Congress triggered a selloff in energy futures. Benchmark West Texas Intermediate (WTI) crude oil price traded down to $76.6 per barrel this week and seem to be stuck in a $70-$80 range this year.

Arlan Suderman discusses how Testimony by Federal Reserve Chair Jerome Powell spooked financial markets, with stocks and bonds lower and the dollar higher, after he drove interest rate expectations higher for longer, with futures expectations now peaking at 5.75% to 6.00%, and staying high into next year.

Arlan Suderman describes how stocks rallied and Treasury yields held steady, as markets looked ahead to this week’s Congressional testimony from Federal Reserve Chair Jerome Powell for guidance on interest rate policy.

Arlan Suderman comments that bearish inflation data created an even stronger argument for a hawkish monetary policy, Treasury yields rose, the Tech sector was under specific selling pressure, and oil and commodity prices were higher. Generally, equity markets have remained remarkably sanguine in the face of this news.

StoneX analyst Vincent Deluard has built an index which considers whether trading conditions are bullish or bearish for Treasuries by analyzing their supply and demand conditions.

Arlan Suderman comments that while business confidence is picking up amid evidence that inflation has peaked, don’t expect central banks to ease off rate rises. Higher inflation could be here to stay a while, but financial markets appear to have priced in this view. Stocks moved modestly higher, led by the Tech sector, Treasury yields pulled back from recent highs, and the economy still showed signs of growth led by services.

Our oil team argue that the entire oil complex will move into more bullish territory with Russian supply constrained, demand robust, and positive technical factors.