|
|
This week's gainers and losers |
Tops / Flops
|
Commodities |
Oil hovered between USD 100 and USD 110 for the two global benchmarks, Brent and WTI. Traders took note of a number of data on the state of supply and demand as the International Energy Agency (EIA) and OPEC revised their forecasts as part of their latest monthly report on oil markets. In broad terms, the EIA expects that the decrease in Russian supply, which could reach 3 million barrels per day (mbd), will be offset by increased production in the United States but also in OPEC. As for demand, its growth has been lowered once again due to a more modest global economic growth. On the OPEC side, the cartel is surprisingly much more optimistic about demand dynamics, which should grow by 3.36 mbpd in 2022 (versus 1.8 mbpd for the EIA). This is certainly good news for central bankers, as industrial metal prices continue to fall. The mood at the LME remains heavy due to the short-term demand outlook, which remains strongly linked to the health of the Chinese industry. The latter is still being hit hard by Beijing's zero-covid policy. In terms of prices, copper has dropped nearly 7% since January 1 to USD 9,000 per ton. In precious metals, gold is moving away from the USD 2,000 mark day by day, weighed down by the rising dollar and rising bond yields. The USDA said this week that U.S. wheat production is expected to contract to 14.5 billion bushels this year (from 15.1 billion last year), a decline mainly due to a reduction in crop area. Amidst the fertilizer shortage, U.S. farmers have shifted to less fertilizer-intensive crops such as soybeans, which are expected to increase from 4.4 billion to 4.6 billion bushels year-over-year. As a result, wheat prices climbed in Chicago to the 1200 cent per bushel line. |
Macroeconomics |
Atmosphere: With or without a parachute? Central banks are slowly moving the anti-inflation guerrilla camp, which is causing investors to break out in a cold sweat, as they fear the evaporation of growth that looked untouchable not so long ago. The optimists believe that the efforts will bear fruit without too much damage to economic activity. The majority fear a hard landing. The pessimists talk about stagflation and bring up the charts of previous oil shocks. Rates: The Fed reiterated its determination to bring inflation under control, but rates paradoxically eased this week. The 10-year US yield went from 3.12% last Friday to 2.92% today. Investors are well aware that the central bank is going to raise rates with determination, but they are (slightly) less afraid that it will brutalize them with a three-quarter point turn in July. In Europe, yields also fell from the previous week as the ECB looks to be setting the stage for an early summer rate hike. The German Bund is at 0.92% and the French OAT at 1.43%, 20 points lower than last Friday. Currencies: The dollar continues to pressurize all other currencies because of the power of risk aversion. The euro made a foray below $1.03 during the week. Parity is not far off. The greenback also benefited from the decline in commodity currencies. The Dollar Index is flirting with 105 - levels not seen for 20 years. Cryptocurrencies: The digital assets market has not escaped the stock market purge of recent days. In the wake of global indexes, bitcoin is shedding more than 10% of its capitalization this week and is back to hovering around $30,000 as of this writing. The digital currency could well sign its seventh consecutive week of decline in this macroeconomic context, which does not inherently have bullish catalysts. Calendar: The European Commission is due to announce its new economic forecasts on Monday at 11am. On Tuesday at 2:30 pm, investors will take note of the US retail sales in April, to see how the sacrosanct American consumer is reacting to inflation. On the same day, Fed boss Jerome Powell will give a speech that will obviously be watched by investors. Finally, on Wednesday, the British statistical institute will publish the April inflation figures. |
|
Things to read this week | ||||||
|
*The weekly movements of indexes and stocks displayed on the dashboard are related to the period ranging from the open on Monday to the sending time of this newsletter on Friday. The weekly movements of commodities, precious metals and currencies displayed on the dashboard are related to a 7-day rolling period from Friday to Friday, until the sending time of this newsletter. These assets continue to quote on weekends. |