Oil extends reserves release losses, Wall Street’s inflation bet and unemployment insurance data are released.
price control
President Joe Biden’s pressure on major oil-consuming nations to release oil from their reserves is showing some signs of success. China announced it would withdraw stocks, with the announcement lowering the price of oil. A barrel of West Texas Intermediate was trading below $78 as investors waited for the US to follow up with a similar announcement. Biden is also focused on gasoline prices for consumers, asking the Federal Trade Commission to investigate possible illegal conduct in the market, saying there is “growing evidence of anti-consumer behavior.” Some US lawmakers are taking advantage of high oil prices to revive legislation that would subject the OPEC cartel to antitrust laws.
Inflation bets
Biden is not the only person under pressure from the inflation outlook. A legion of Wall Street analysts who have spent most of their careers with little to worry about inflation are now having to make possibly career-defining appeals about what will happen next. The prospects for Federal Reserve policy remain uncertain. This morning, JPMorgan Chase & Co. became the last major bank to drop its decision that the central bank would remain on hold until 2022, with economists there now forecasting an increase in September next year. Investors, meanwhile, are still awaiting news of who the next Fed chairman will be.
Requests
One of the arguments JPMorgan strategists cite for their new call on yields is that they see the Fed fulfilling its employment mandate earlier than previously expected. Today’s weekly unemployment claims data at 10:30 am Brasilia time should show more progress in that direction, with the number of people applying for benefits dropping to 260,000, which would be a new post-pandemic low. Meanwhile, economic orthodoxy is being destroyed as usual in Turkey. The central bank this morning cut its one-week repurchase rate by 100 basis points to 15%, despite consumer inflation hovering around 20%.
calm markets
It’s turning into another relatively quiet session in global equity markets as investors remain unfazed by inflation. Overnight, the MSCI Asia Pacific index fell 0.4%, while the Topix index closed 0.1% lower. In Europe, the Stoxx 600 Index was down 0.1% at 7:50 am with energy companies the biggest losers, while travel stocks rebounded from yesterday’s Covid sale. S&P 500 futures pointed to a small gain at the opening, the 10-year Treasury yield was at 1.601% and gold was lower.
Arriving…
The Philadelphia Fed Outlook for November tracks unemployment claims data at 10:30 am. Kansas City Fed Manufacturing is at 1:00 pm. The US sells $14 billion in 10-year TIPS at 3:00 pm. Regional Fed Chairs Raphael Bostic, John Williams, Charles Evans and Mary Daly speak at various events today. Macy’s Inc., Kohl’s Corp., Palo Alto Networks Inc. and Applied Materials Inc. are among the companies that reported results.
