Brent sub $60
The last time that oil was at this level (now clawed its way back to $62) was in February 2021, following the 18% drop in price in the past 6 days. Currently, although for very different reasons, events plus supply resemble what happened to the oil market in 2020, when during the economic slowdown caused by the Covid pandemic and lockdown, Saudi Arabia maximized production. This time the unfolding and unpredictable global trade war is the market event together with the imminent supply event of the OPEC+ decision to increase production by 411,000 barrels per day. With no sign yet that there is a rapprochement between the USA and China as the two largest global economies engaged in a bitter trade war, despite other smaller nations looking to negotiate with the USA, it does not look good for the global economy nor for the oil price. Nowhere is this low oil price level more front and centre of mind than in the US oil industry, where $60 is below the breakeven price for many producers and where the pump baby pump mantra merely causes a hollow laugh.
EUR/USD 1.1132.
US Inflation
Is it just us or is the Chair of the Federal Reserve looking even more careworn than usual? It would be unsurprising if he were since he is beset by conflicting economic factors in the US markets. Inflation at 2.6% looks to be going the right way, but he knows that with Trump tariffs that is going to reverse. Stock and bond market moves of the magnitude seen in recent days, prompted by the war of words and on off on tariffs, would be more than enough for a Fed Chair. On top of that, he has POTUS calling for lower interest rates now or else. That has prompted Chair Powell to say that he will not resign as that is clearly the presidential or else. Moves of this magnitude place strains on market participants and security margin calls prompt sudden liquidity glitches. More than enough to give Jay Powell sleepless nights.
GBP/USD 1.2933.