Daily Brief – Gold and Oil

Gold and Oil

Following the longest US Government shut down ever, the market view is that following the re-opening of the US Government, the data reporting that has been absent will resume and that data will strengthen expectations of a cut in US interest rates. That resulted in the USD selling off and US Yields falling which in turn sent Gold up to a spot price of USD 4232. In the Oil market, prices fell with Brent down to USD 62.59 yesterday on the back of a rise in US crude inventories and fresh forecasts from OPEC suggesting that supply would outstrip demand in 2026. US Crude production is set to reach its highest levels ever in 2026 and at the same time inventories will increase further as supply exceeds demand. Unsurprisingly, that is not a backdrop to higher Oil prices.

EUR/USD 1.1620.

Full Mutualisation

This latest Euro jargon speak is what Belgium wants from the rest of the EU. As we have written the EU is in principle keen that the EUR 140 billion of frozen Russian financial assets held at Euroclear, Brussels is used either directly or indirectly as security for a reparations loan to Ukraine. Belgium, not unreasonably, want to see more than a “we are right behind you” from the rest of the EU and fears reprisals from Russia if their assets are removed from Euroclear. Again not unreasonable given that Russia is the prime suspect for the drone disruption at Liege and Brussels airports in the past week. As an alternative way through this intractable maze EU Commission President Ursula von der Leyen has proposed an EU loan secured against the EU budget. That has received an immediate veto from the Nordic members on the grounds of an increase in EU borrowing not fitting with their prudent approach, so we are back to Belgium wanting air tight guarantees and cast iron legal certainty and other pie in the sky pre-conditions of all of the EU being on the hook for the reparations loan. Meanwhile, the March deadline looms for such a loan which is when Ukraine runs out of money to purchase arms and foreign aid in the absence of US support and means that the only meaningful source of funds is in practice the EU.

GBP/USD 1.3155.

Turkish Prison Sentences

The Turkish legal system does not hang about when it comes to punitive custodial sentences with 1000 year sentences being unusual but by no means unknown. This week 402 suspects have featured in a 4000 page indictment accused of conspiracy and corruption. The chief defendant is the Mayor of Istanbul Ekrem Imamoglu, for whom Turkish prosecutors have demanded a record breaking 2,352 year sentence despite his main offence to outside observers at least being that he has challenged President Erdogan. The report states rather dryly that such a sentence makes Ekrem Imamoglu running in the next presidential elections somewhat unlikely.

EUR/JPY 179.53.

Feng Shui

A Sydney, Australia based Vietnamese mother and daughter combo have been arrested in a major NSW police swoop. The mother played fortune teller and the daughter, the feng shui expert – feng shui is the ancient Chinese art of harmonising people with their surrounding environment – and together they put together a scam that netted them AUD 70 million or USD 46 million. The mother would predict that the punter would shortly meet a billionaire who would transform their life, but in order to ensure that the billionaire would materialise, they should take out a loan from which the mother and daughter would take a cut. New South Wales’ finest thought they were hard on the heels of a motor fraud gang when they initiated their enquiries since the mother and daughter also had a lucrative sideline in motors that did not in fact exist – so called ghost cars. As it transpired not only the cars but also the billionaires were ghosts and the victims are mainly from the Vietnamese community in Sydney. Woo hoo.

GBP/EUR 1.1325.

She’s The One/It’s Only Us

This day in 1999 Robbie Williams scored a palpable hit Number 1 with this number having of course already had 6 previous Number 1’s under his microphone as a member of Take That.

And they want us to grow up
But we don’t want to get a job
We all need a decent rock
Where it’s all kicking off
Baby it’s all right
Baby it’s all right
You don’t need to cause a fuss
Baby it’s all right
Baby it’s all right
It’s only us
We’re just after cheaper thrills
Since the price went up on pills
From Stoke On Trent to Beverley Hills
You know it’s all kicking off
Baby it’s all right
Baby it’s all right
You don’t need to cause a fuss
Baby it’s all right

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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