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On May 25th, European Central Bank (ECB) President Christine Lagarde stated that the ECB is likely to raise its inflation outlook when policymakers meet next month. She said on Sunday that the March forecast of 2.6% inflation this year "may be revised," adding that the situation "has changed" since then. Her comments confirm recent signals from policymakers, including Governing Council member Demarco. Demarco, in an interview, suggested that the forecast, released shortly after the outbreak of the Iran-Iraq conflict, might have been overly optimistic. Lagarde declined to elaborate on whether such a revision would lead to a rate hike by the ECB on June 11th. "The current situation is so uncertain that we must examine all available data, assess how the economy will develop in the coming quarters, determine whether action is needed, and what the medium-term impact will be," she said. "Our target is 2% in the medium term."On May 25th, Kevin Hassett, US President Trumps chief economic advisor, stated that he believes the eventual drop in oil prices will create room for the Federal Reserve to cut interest rates. "We again expect that once an agreement is reached, energy prices will plummet," Hassett said. "When that happens, the Fed will have ample room to take the right action and lower interest rates." He emphasized his respect for the Feds independence and praised Kevin Warsh, who was sworn in as Fed chairman last Friday. While the surge in US fuel prices caused by Irans closure of the Strait of Hormuz poses a growing political risk to Trump and his Republicans in the November midterm elections, Hassett believes that accelerating inflation is primarily driven by energy prices. "If you look at the recent data reports, energy prices are absolutely worrying, but core prices have hardly changed," he said. "I think once we see energy prices fall, you might actually see negative inflation because of the drop in energy prices."European Central Bank President Christine Lagarde: The current situation is too uncertain to make a commitment on interest rates; inflation forecasts may be revised in June, at which time the ECB will assess the economic situation by taking all data into account.May 25th - According to sources, Ubers board of directors met on Saturday to discuss raising its takeover bid for German food delivery group Delivery Hero. Uber had previously offered €38 per share to Delivery Heros largest shareholder, but this was rejected. Uber is currently evaluating whether to raise its offer again. Meanwhile, several Delivery Hero shareholders have stated they are seeking a price of over €40 per share for the entire company, which would value the company at approximately €13 billion.According to the Financial Times, Uber (UBER.N) is considering a higher offer from Delivery Hero after its €11.5 billion takeover bid was rejected.

WTI crude oil drifts above $80.00 amidst a US Dollar rebound and supply shortage concerns

Alina Haynes

Apr 10, 2023 14:16

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In the early hours of Monday, purchasers of WTI crude oil struggled to maintain the price above $80.70 as risk aversion and hawkish Fed forecasts bolstered the US Dollar. However, threats to Oil supplies, primarily emanating from China and OPEC+, appear to keep purchasers of black gold optimistic.

 

US Dollar Index (DXY) reverses a four-day downtrend near 102.25 despite the inability of US Treasury bond yields to recover due to recession concerns. However, US 10-year and 2-year Treasury bond yields remain under pressure near 3.37 percent and 3.95 percent, respectively. In doing so, the benchmark bond coupons extend the previous day's losses and illustrate the market's flight to protection in response to concerns of an economic decline.

 

In spite of this, the recent disappointing US data reignite concerns of a recession in the world's largest economy and challenge the optimists in the energy sector. However, the positive US Nonfarm Payrolls (NFP) data enabled Fed hawks to return to the table and renew demands for a 0.25 percentage point rate hike in May. The same constrains the value of the US dollar and stimulates demand for WTI crude oil.

 

On the other hand, geopolitical concerns surrounding China, particularly after the dragon nation's military exercises near Taiwan, combine with last week's unexpected OPEC+ production cut to keep Oil purchasers optimistic.

 

China's willingness to defend the global economy through robust monetary and fiscal easing at home also enables Oil purchasers to maintain optimism in the face of optimism among the world's largest Oil consumers.

 

The Easter Monday holiday in spot markets may limit Oil price movements, but the investors appear to be out of steam, so US inflation and Fed Minutes will be closely monitored for signs of a pullback.


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