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On March 20th, Federal Reserve Governor Waller stated that if oil prices remain high for several months, they could eventually trigger inflation. Investinglive analysts pointed out that Waller, who had previously favored lowering interest rates, has changed his stance amid renewed inflation concerns triggered by the recent surge in oil prices. Waller believes the risks posed by rising energy costs are more widespread than price increases due to tariffs, as oil is a crucial component of many goods and services in the economy. In contrast, he believes tariffs are more likely to trigger a one-off price adjustment than sustained inflation. He also noted that tariff-related price pressures are currently milder than expected. However, he cautioned that if these price pressures do not ease by mid-year, they could evolve into a more persistent inflation problem. Currently, inflation expectations remain stable, and the base case view still leans towards easing price pressures, but Wallers shift highlights a growing sensitivity to energy-driven risks and reflects a more cautious wait-and-see attitude.On March 20th, Federal Reserve Governor Bowman (a dovish official) stated in an interview with Fox Business News that it is too early to assess the impact of the Iran war, and she expects strong economic growth this year thanks to government supply-side spending. Bowman said she hasnt heard of companies laying off workers, but she remains concerned about the job market. She also indicated she still expects three interest rate cuts this year. Regarding banking regulation, Bowman wants to ensure that the current banking regulatory reforms fully consider the needs of banks and will continue to adjust regulations according to the characteristics of banks. Bowman is closely monitoring the private lending sector and also paying attention to leverage in the field of artificial intelligence, ensuring that regulators are aware of the associated risks. Bowman stated that she looks forward to working with Kevin Warsh, and that if his appointment is approved, it will have a significant impact on the Federal Reserve. Regarding Federal Reserve Chairman Powell, Bowman said that Powell has clearly stated his terms of office at the Federal Reserve, and she will allow Powell to explain the relevant details himself.Federal Reserve Governor Waller: If there are losses in private lending, it is the responsibility of some corporations and wealthy individuals.Federal Reserve Governor Waller: Balance sheet reduction could be discussed if reserve demand declines.Federal Reserve Governor Waller: There is no reason for the Fed to create a reserve shortage.

WTI corrects below $77.00 as buyers grow nervous ahead of the Caixin Manufacturing PMI

Daniel Rogers

Mar 01, 2023 11:42

After encountering stiffer resistance above $77.50 in the late New York session, West Texas Intermediate (WTI) futures on the New York Mercantile Exchange have sharply reversed. As investors wait for the Caixin Manufacturing PMI data to be released, the oil price has fallen to $76.60 and is expected to remain on edge.

 

There is no disputing that international organizations and investment banking firms are optimistic about a strong economic rebound in China following the administration's dismantling of pandemic controls following a three-year lockdown. The People's Bank of China (PBoC) has pledged a complete recovery in domestic demand through expansionary monetary policy, so China's post-pandemic period is anticipated to be robust.

 

Investors are anxiously awaiting February's figures after being taken aback by January's disappointingly low Caixin Manufacturing PMI data. A prolonged period of negativity would be detrimental to the market's oil prices. In general, investors continue to be risk cautious as they anticipate a bleak future due to aggressive Western central banks. And the current low Manufacturing PMI for China will make investors' risk aversion even worse.

 

The majority predicts that IHS Markit will issue the Caixin Manufacturing PMI at 50.2, up from the previous release of 49.2.

 

In addition to the Caixin Manufacturing PMI, the United States Energy Information Administration's (EIA) oil inventory data for the week concluding February 24 will be closely monitored.

 

Despite being smaller than the previous release of nearly 10 million barrels, US American Petroleum on Tuesday reported a massive stockpile of oil stockpiles of 6.20 million barrels. For the past three months, oil inventories have been steadily growing, pointing to a sharp drop in global consumption.