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June 16, OPEC lowered its expectations for supply growth from the United States and other competitors next year, but maintained its expectations for oil demand while continuing to increase production. OPEC expects supply from oil-producing countries outside OPEC+ to fall to 730,000 barrels per day in 2026 from 800,000 barrels per day previously. U.S. oil production is expected to increase by 210,000 barrels per day, compared with a previous expectation of 280,000 barrels per day, reflecting a decline in capital expenditures and a slowdown in drilling activities. The latest OPEC monthly report did not directly mention the conflict between Israel and Iran. The biggest concern in the market is that Iran may close the Strait of Hormuz, an important shipping choke point where about a third of the worlds oil passes through. Analysts say any supply disruptions could prompt OPEC+ to adjust its strategy and restore supply faster than expected. But OPEC seems to be on the sidelines and has not made any plans to hold a special policy meeting. OPEC currently has more than 5 million barrels per day of idle capacity.The New York Fed manufacturing index for June will be released in ten minutes.According to Israeli media: Israels new round of air strikes targeted dozens of targets in central Iran.June 16, according to the financial website Forexlive, the Bank of Japan is expected to keep interest rates unchanged at 0.5% and slow the pace of reducing bond purchases from fiscal 2026. Few expect the Bank of Japan to change its current plan, only to announce adjustments in the next fiscal year to reduce the quarterly reduction to around 200 billion yen. If the Bank of Japan announces adjustments for the current fiscal year, it will be a surprise and will have a big impact on the yen. A faster pace of reduction will boost the yen, while a slower pace will weaken it. In terms of interest rates, the market expects only a 17 basis point increase this year, which means that there is basically a 50% chance of a 25 basis point increase by the end of the year. The comments of the Bank of Japan spokesperson were roughly the same, with no signs of interest rate adjustments in the short term. They continue to focus a lot of attention on the US-Japan trade agreement and the evolution of inflation. Japans potential inflation has been rising steadily, which should keep the probability of interest rate hikes high, especially considering that the United States and Japan will eventually reach a trade agreement. Therefore, pay attention to more clear signals about interest rate changes and timing.On June 16, from June 27 to June 30, 7 corporate bonds under Xuhui Holdings Group will hold an online creditors meeting to review the bond restructuring proposal. The restructuring plan includes adjusting credit enhancement measures and providing other options for the restructuring plan, including bond repurchase options, Xuhui Holdings Group stock economic income rights options, debt-equity swap options, and general debt options. If the bondholders do not choose any of the above options, they will enter the full debt-retaining and long-term extension plan. Xuhui does not provide a bottom line for the trust shares in the debt-equity swap option: this trust plan has no fixed term, and the repayment amount and repayment time of the trust shares depend on the operation or disposal of the assets to be offset, and the issuer does not bear joint and several liability for the repayment of the trust shares. The full debt-retaining and long-term extension plan is an extension of 9.5 years, and the interest rate is reduced to 1%.

Embrace the uncertainty’ from less central bank guidance – former Fed officials

Jimmy Khan

Jul 29, 2022 14:54

Even as markets try to predict the U.S. central bank's upcoming policy decisions, investors and policymakers should embrace the Federal Reserve's shift to providing fewer firm signals on forward guidance, according to two former Fed officials.

Former Atlanta Federal Reserve president Dennis Lockhart said on Thursday at the Reuters Global Markets Forum (GMF) that the guidance we've previously seen "creates an expectation that's unjustified."

The Fed is navigating and figuring things out as they go along, so I think it's better to accept the uncertainty, he said.

Former Fed Board of Governors member Jeremy Stein told GMF that the central bank's flexibility is limited by too detailed guidance at a time when the course of inflation and economic growth is still unknown.

"The key question is how much higher we can raise interest rates in a year. Actually, we don't know. Giving the market a false sense of security is ineffective, according to Stein, a professor at Harvard University at the moment.

Jerome Powell, the chair of the Fed, avoided indicating the magnitude of upcoming rate hikes after the central bank boosted interest rates by 75 basis points on Wednesday. Similar emphasis has been placed on a meeting-by-meeting "data-driven" approach by other central banks.

According to Stein, markets frequently run the risk of ignoring the more crucial issue of how high rates will ultimately rise and how they will affect financial conditions.

A 100-basis-point rate hike is possible, according to Lockhart, even though the chance is slim at the Fed's September meeting. He and Stein had doubts about how rapidly inflation would decline.

Stein said that during the Great Financial Crisis of 2008, both unemployment and price increases spiked, and a repeat of this situation may put the Fed's resolve to get inflation back to its target of 2 percent to the test.



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