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On August 13th, UOB analyst Alvin Liew outlined the banks expectations for the federal funds rate following the release of the July US CPI data. Market pricing in a September rate hike has decreased, and UOBs base case scenario is an extended pause throughout 2026. The bank anticipates two 25-basis-point rate cuts in 2027, gradually lowering the federal funds rate to approximately 3.25% by the end of 2027: "We maintain our base case scenario, where the Fed maintains its pause for the remainder of 2026 and then resumes its easing cycle in 2027, likely with two 25-basis-point cuts at the end of the second and fourth quarters of 2027. Under this scenario, the federal funds target rate is expected to remain unchanged until the end of 2026, then gradually decline to 3.25% by the end of 2027, which remains our estimate for the final federal funds rate. While the risks to our FOMC outlook have become more balanced following the June and July CPI reports, they remain slightly skewed to the upside due to geopolitical and energy-related uncertainties, and we remain vigilant about the significant risks of policy tightening."On August 13th, Elias Haddad, an analyst at Brown Brothers Harriman, pointed out that the New Zealand dollar briefly dipped below its 200-day moving average today due to mixed results from the Reserve Bank of New Zealands third-quarter inflation expectations survey, but the overall anchor remained strong, close to the 2% midpoint target. Given that inflation remains above target, domestic growth is stronger, and the policy rate is near the lower end of the neutral range, Haddad believes there is reason to further raise interest rates, and the swap market has fully priced in a 75 basis point tightening, which is positive for the New Zealand dollar.The number of initial jobless claims in the United States for the week ending August 8, as well as the July PPI monthly and annual rates, will be released in ten minutes.August 13 - According to the Islamic Republic News Agency (IRNA), a spokesperson for the Iranian Joint Military Command stated, "No vessel can safely pass through the Strait of Hormuz without permission. Any vessel must obtain permission from Iran to pass through the Strait of Hormuz. Iran has complete control over the Strait of Hormuz. The Iranian military monitors US movements in the region, and Trumps claims about controlling the strait are lies."On August 13th, the 5th China RISC-V Industry Forum was held in the Lingang New Area to promote the in-depth development of domestically produced RISC-V chips. The forum aimed to accelerate the industrialization and application innovation of domestically produced RISC-V chips. Of the more than 40 products showcased at the forum, the overall mass production rate has exceeded 90%, and these chips are widely used in consumer electronics, smart homes, wearable devices, communications, automobiles, industrial control, and other fields. This mass production achievement fully demonstrates that domestically produced RISC-V chips are accelerating their transition from technological innovation to large-scale application and have already been implemented in multiple industries and application areas.

WTI struggles at $87 as recession worries probe OPEC's forecast and supply deficit fears intensify

Daniel Rogers

Sep 14, 2022 11:42

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After reverting from the weekly high, WTI crude oil traders seek clear direction around $87.50 during Wednesday's Asian session. However, the present hesitation in the price of black gold may be attributable to the mixed concerns regarding the demand-supply matrix.

 

The Organization of the Petroleum Exporting Countries (OPEC) indicated in a monthly report that oil consumption will climb by 3,1 million barrels per day (bpd) in 2022 and by 2,7 million barrels per day (bpd) in 2023, which is unchanged from last month. Despite obstacles such as rising prices, the news also highlighted indications that major economies were performing better than projected.

 

The news that the United States intends to replenish its emergency oil reserves, as well as the German and European move to control Russian oil and gas prices, could also be favorable for energy prices. In addition, rumors that the Western oil deal with Iran is a long way off are bolstering fears of a supply bottleneck and should have helped energy bulls.

 

Tuesday's US inflation statistics revived concerns about the Federal Reserve's fast rate hike and exacerbated recession concerns. Also acting as downward drivers for WTI crude oil are expectations of economic slowdown due to China and Russia-related concerns.

 

In spite of this, the US Consumer Price Index (CPI) for August increased by 8.3% year-over-year, surpassing market expectations by 0.1%. However, the monthly data increased to 0.1%, exceeding the -0.1% projected and the 0.0% shown in previous assessments. The core CPI, or CPI excluding food and energy, likewise exceeded the 6.1% consensus and 5.9% prior to printing at 6.3% for the month in question.

 

It should be mentioned that the weekly prints of the American Petroleum Institute's (API) industry inventory report also contributed to the commodity's downfall. The API Weekly Crude Oil Stock climbed to 6,035 million during the week ending September 9, up from 3,645,000 the previous week.

 

In the future, the price of black gold may stay under pressure due to a stronger US dollar and economic troubles. Before today's official weekly inventory data from the U.S. Energy Information Administration, however, the supply crisis concerns could test the bears (EIA). Thursday's US Retail Sales for the month of August and Friday's preliminary reading of the September Michigan Consumer Sentiment Index will also warrant close attention.

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