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The yield on Japans 40-year government bonds fell 2.0 basis points to 3.785%.On July 1st, European Central Bank (ECB) Governing Council member Demarco stated that the ECB should not rush into further interest rate hikes given the unexpectedly rapid decline in oil prices. The ECB raised rates in June, with its own forecasts based on further policy tightening. However, the rapid decline in energy costs in the following weeks strengthened the case for delaying further rate hikes. Demarco stated that lower energy costs should quickly alleviate inflation expectations and curb wage increases. This statement further strengthens the ECBs rationale for keeping rates unchanged this month, after several policymakers had previously called for patience and a pause in further action. Demarco stated that there is only reason to raise rates now if a second round of inflationary effects occurs, inflation expectations decouple, or wage increases become more prevalent. "We havent seen these scenarios yet, so given that oil prices have fallen back to levels similar to those before the conflict, we can wait for the next round of forecasts rather than hastily raising rates again and risking unnecessary damage to economic growth." He also noted that even in the more dovish scenario in the latest forecast, there is still an assumption of further policy tightening. Therefore, if future data confirms this scenario, the European Central Bank may still need to raise interest rates further.XPeng Motors: It is expected to launch the XPeng MONA L03 in China on July 2 and start pre-sales on the same day, followed by a global market launch in July.NIO: In June 2026, it delivered 40,597 vehicles, a year-on-year increase of 62.9%.XPeng Motors: Delivered 40,126 vehicles in June and 103,295 vehicles in the second quarter.

In a risk-on environment with a weaker US dollar, WTI consolidates weekly losses above $83,000

Alina Haynes

Sep 09, 2022 17:17

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The price of WTI crude oil is higher for the second day in a row while paring the weekly losses at the eight-month low on Friday during the Asian session. However, by the time of publication, the black gold has reached a new intraday high of around $83.50.

 

Recent news reports from the US Treasury Department regarding the oil price cap appear to have helped drive up energy prices together with stronger sentiment and a weaker US dollar. According to the US Treasury source, "the oil price cap should be set above the marginal production cost, taking into account past Russian oil prices."

 

In other news, stronger sentiment and slow US Treasury yields cause the US Dollar Index (DXY) to fall intraday by 0.55%, to 109.05 at the latest. It's interesting to see that after a solid day, the US 10-year Treasury yields are still stuck around 3.32%, while the S&P 500 Futures tracks Wall Street's gains at approximately 4,020.

 

Recent market sentiment appeared to be aided by remarks made by US Treasury Secretary Janet Yellen, which suggested that trade relations between the US and China were set to improve. The market's attitude also appeared to have been aided by recently stronger US statistics and expectations that global central bankers will be able to offset the shock caused by inflation with a comprehensive strategy and higher rates. The Wall Street Journal (WSJ) article, on the other hand, raises some concerns about the future of China's technological enterprises and casts some doubt on the optimism.

 

A price document examined by Reuters on Friday revealed that Kuwait has decreased the official selling prices for its oil grades for the month of October from the previous month. Before the present program ends in October, US Energy Secretary Jennifer Granholm said the administration of US President Joe Biden is considering whether additional releases of crude oil from the country's emergency stockpiles are necessary. Prior to that, a Department of Energy official reportedly told Reuters that the White House was only considering releasing the 180 million barrels from the US Strategic Petroleum Reserve (SPR) that the president had already stated.

 

It should be highlighted that the recent decline in China's inflation data, coupled with the hawkish central bank activities, presents a challenge to oil purchasers. Both China's Producer Price Index (PPI) and Consumer Price Index (CPI) show unfavorable results for August. However, compared to 2.8% market expectations and 2.7% in the prior year, the headline CPI declined to 2.5% YoY, and the PPI fell to 2.3% from 3.1% projected and 4.2% in the preceding year.


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