Evergrande, Inflation and the Oil Price War
Yesterday's data on inflation in the UK showed the highest growth rates over the past 9 years, which naturally raises questions for the Bank of England about the advisability of tightening monetary policy.
There are similar questions to the Bank of Canada, where consumer inflation reached 4.1% y / y.
In general, yesterday clearly showed that the Central Banks and Governments have finished their game by releasing the genie of inflation from the bottle. But no one has enough willpower to admit the problem and start doing something. So September 22 (the date of the next FOMC Fed meeting) looks more and more intriguing in this light.
We see the next week no less intriguing in the context of the information that the Chinese developer China Evergrande Group, with obligations of about $ 300 billion, will not be able to pay interest on its debt next week. In fact, we are talking about a default. And this could be the first domino to fall for a heavily over-leveraged China as a whole. And if China falls, it will not seem a little to everyone.
No less interesting things are unfolding now in the oil market. Yes, so far everything looks cloudless for buyers: hurricanes reduce oil production in the United States, oil reserves are melting, and demand forecasts are growing.
But the markets ignore very important trends that are already in full swing: we mean the news that Saudi Arabia began to sell its oil at a discount, and this week Russia began to do the same (on Tuesday, the Urals grade from the Baltic Sea was offered at a discount at $ 2.35 a barrel against Brent) and Iraq (Basrah Light will trade at a discount of $ 1.15 a barrel). Now guess who is in the top 3 in terms of oil production in OPEC +?
Everyone is afraid to say it out loud, but the current situation is best described by the term "price war". The last time something like this happened in the spring of 2020 and it all ended with minus $ 50 per barrel of WTI oil (we are talking about the futures market, not the spot market).
There are similar questions to the Bank of Canada, where consumer inflation reached 4.1% y / y.
In general, yesterday clearly showed that the Central Banks and Governments have finished their game by releasing the genie of inflation from the bottle. But no one has enough willpower to admit the problem and start doing something. So September 22 (the date of the next FOMC Fed meeting) looks more and more intriguing in this light.
We see the next week no less intriguing in the context of the information that the Chinese developer China Evergrande Group, with obligations of about $ 300 billion, will not be able to pay interest on its debt next week. In fact, we are talking about a default. And this could be the first domino to fall for a heavily over-leveraged China as a whole. And if China falls, it will not seem a little to everyone.
No less interesting things are unfolding now in the oil market. Yes, so far everything looks cloudless for buyers: hurricanes reduce oil production in the United States, oil reserves are melting, and demand forecasts are growing.
But the markets ignore very important trends that are already in full swing: we mean the news that Saudi Arabia began to sell its oil at a discount, and this week Russia began to do the same (on Tuesday, the Urals grade from the Baltic Sea was offered at a discount at $ 2.35 a barrel against Brent) and Iraq (Basrah Light will trade at a discount of $ 1.15 a barrel). Now guess who is in the top 3 in terms of oil production in OPEC +?
Everyone is afraid to say it out loud, but the current situation is best described by the term "price war". The last time something like this happened in the spring of 2020 and it all ended with minus $ 50 per barrel of WTI oil (we are talking about the futures market, not the spot market).
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