Read on the Trading Floor - 09 Oct 2023
Today’s focus… oil, rates but most importantly prayers
Theme 1: Tragedy in the Middle East
The horrific scenes from Israel and Palestine have dominated the news wire today, and the thoughts and prayers of @HarksterHQ go to those on the ground. We all hope for a swift resolution!!!
We're not a middle east geopolitical specialist, and will never pretend to be, so we will leave it to the experts. For the market, the weekend events have brought a renewed focus on the price of oil.
Bloomberg Opinion - For Oil, It’s Not 1973 Again – But It Could Still Turn Ugly
The Blind Squirrel's Monday Morning Notes - A pensive squirrel contemplates the energy outlook.
Steno Research - Great Game - What comes next for Hamas and Israel
- - What To Make Of The Current Geopolitical Situation (Israel) And What It Means For Oil?
S&P Global - Factbox: Hamas attack on Israel raises regional energy stakes
- Fidenza Macro - Market implications of the war between Israel and Hamas
Bloomberg - Gaza Won't Hamper Markets - Unless Israel Strikes Iran
What had started with the US negotiating a potential oil release from the Saudi Arabia in the New Year as part of the Saudi/Israel deal (WSJ) has ended with another potential energy shock to the global system. According to the Guardian Explainer (Israel-Hamas war: what has happened and what has caused the conflict?).. "If Iran is involved, it will hope the violence will scupper any deal between Israel and Saudi Arabia."
Of course, this latest surge in oil comes at a time when the majority of global central banks are starring down the barrel of a wave of stagflation. After the 3-month rally from $70 to $95, oil had already become a key driver of the "refuelling" CPI narrative. This shock comes just as base effects are now a headwind rather than a tail wind for Central Banks in their fight to get inflation back under control.
Theme 2: Two Sides to the Higher for Longer Narrative...
After the record yield sell off, it's only natural that the negative asset price spiral of the past 4 weeks has been a key focal point of analysis over the weekend. If we're honest, this is what the Fed are looking to do, force a slow-motion asset deflationary slide, weaken demand, increase UER and (hopefully) kill inflation.... but the side effects of higher real yields are starting to mount, can the Fed land the plane?
Saxo Bank - COT Positioning Update: Surging yields drive broad commodity weakness and long liquidation
Steno Signals - There is not enough buyers for bonds amidst all this
... but are higher rates only bad news?
- - The bright side of higher interest rates
Forward Guidance - Bond Bear Sees Tradable window For Bonds To Rally After Vicious Sell-Off
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Theme 3: Some further reading / listening of note... SBF Trial, McCarthy the answer (again) to the house paralysis, IMF in focus. UAW strike and NFP...
Unchained - Are SBF's Lawyers Playing With Fire in the Courtroom?
Axios - McCarthy doesn't rule out speaker comeback amid House paralysis
Axios - UAW workers reject Mack Trucks contract offer and vote to go on strike
UBS Top of the Morning - September Jobs Report and the Week Ahead
Finally, @HarksterHQ would like to thank
for its recommendation today in its excellent Monday Morning Note (link)Have a great day and keep smiling
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