It's been lurking in the background for a bit and, as usual, it's difficult to understand the dynamics of it's supply and demand, OPEC, the US Strategic Petroleum Reserve, the war in Ukraine, countries buying it for local currency from Russia & more.
Level of US SPR over last 10 years. Thanks YCHARTS
Oil is centre-stage in the BRICs narrative, getting off the petrodollar system (a US-Saudi initiative) it's core KPI.
The Petrodollar [investopedia]
Saudi Arabia has been invited to join BRICs.
The price of oil has surged since July thanks in part to Saudi restricting supply, but also increased difficulties in getting it out of Russia
Russia routes thin-hulled oil tankers through Arctic for first time [FT]
Oil is a critical driver still of world energy prices. With the inflation narrative (below) now changing keep an eye on oil.
The deflationary bust argument so popular with macro analysts still isn't here and CPI is still too high and now ticking up again. Hopes for a recession (!) and the FED slashing rates is receding quickly. That stopped clock will indeed have the correct time, at some stage.
The US Treasury market is now taking note
US 10 Year Yields (monthly) now approaching pre GFC levels. No chance of QE with inflation above target.
Higher food and energy prices, higher rates for longer, a slew of banks forced to hold loss-making Government debt and the continuing worsening credit conditions for companies, is becoming a narrative too.
The FED brushed the 2 biggest banking insolvencies ever under the carpet in March / April of this year.
Western Central Banks are all technically insolvent, Governments will have to restructure them, but Government, Municipal and State debts worldwide are out of control.
Markets are not pricing in a global credit event yet, but it's being talked about..
Fed losses breach $100 billion as interest costs rise [Reuters]
Credit Suisse bond investors plot lawsuit against Switzerland [FT]
The Chinese economic crash narrative is over for now as deflation disappeared with a positive CPI print and retail sales and industrial production pick up. Plenty of monetary easing from the PBoC and stealth currency intervention has stabilised the Yuan.
The property development saga is fully priced in the market, so China moves into the background
China’s Economy Shows More Signs of Stabilizing on Policy Boost [Bloomberg]
Before the data was published Friday, the People’s Bank of China cut the amount of cash lenders must keep in reserve for the second time this year and injected a net 191 billion yuan ($26.2 billion) via its one-year policy loan medium-term lending facility into the interbank market.
China Urges Brokers To Cut FX Trading In Support For Weak Yuan [Bloomberg]
USD / Offshore Yuan Daily
The current German recession and slowing global trade hasn't stopped the fixation with prices paid, although Madam Lagarde seems to be telling us that the terminal rate is near.
State and Corporates are the focus here, with the Qantas scandals just being the latest in a long line of corporate wrongdoing. State finances are a popular topic of conversation and Govt seems to be intent on backing a losing referendum poll.
Mookhey clears runway for AAA credit rating loss from NSW budget [AFR]
Qantas approved Joyce share sale five weeks after ACCC notice [AFR]
Business confidence has stabilised but the consumer is less happy.
Surprisingly strong employment numbers reignited further rate hike talks.
And finally the currency found some buyers (via Iron Ore) .
Iron Ore Futures Daily
AUD / USD Daily