The US Dollar continued its rise with yields and safe haven sanctuary in 2024, thwarting the BRICS declaration of the end of the greenback. It remained a source of stability as instability attained momentum globally at the “periphery.” The dollar also got sought for carry trades such as the Japanese Yen and Mexican peso though these featured their own moments of extreme volatility. Yen weakness provided key support to dollar melt-up dynamics with BOJ slow-motion “normalization” in a world of … Continue reading “The US Dollar Flexed Last Year, What is Ahead?”
Looking Ahead, Traders Bond Market Template for 2025
The year 2024 marked the fourth year that bonds underperformed cash, a record since Bloomberg started compiling the data on T-bill returns in 1991. US Treasuries gained 0.7% on average through Dec. 18, 2024, compared with a 5.1% return in T-bills. Over the past four years, bills returned a total of 12%, compared with a loss of 10% in government bonds. U.S. and global yields surged higher as the Fed began its easing cycle which meant bonds finished weaker than … Continue reading “Looking Ahead, Traders Bond Market Template for 2025”
Understanding Carry Trade Risk, a BOJ Yen Case Study
When markets get all one way, over leveraged and participants drinking the same cool aid any quiver against the grain can quickly become a shake. Essentially the carry trade is funding an investment from a cheaper source, in this case the Yen with negative interest rates and buying an asset with positive returns. The deeper and longer the carry trade goes on the natural motives of risk and greed entwine and when it goes wrong is amplified in low liquidity … Continue reading “Understanding Carry Trade Risk, a BOJ Yen Case Study”
DeepSeek The AI Speculative Bubble Top?
The spectacular rise of the stock markets through 2024 and early 2025 have been powered by a speculative AI mania. There can be little doubt that valuations have got somewhat ahead of themselves by any measure. Yet, as always in manias we hear, this time it is different, but is it? One just has to look at the market reaction to Chinese start-up DeepSeek’s artificial intelligence (AI) models being listed as a free open-source app. They were listed for free … Continue reading “DeepSeek The AI Speculative Bubble Top?”
Around The Barrel – Crude Oil Market Outlook for The Week
Oil futures continued to bounce off support ahead of the Juneteenth holiday Wednesday to settle at their highest level in seven weeks. Traders appear to be catching the stock market bug with bullish prospects for global crude demand. West Texas Intermediate crude for July delivery rose $1.24, or 1.5%, to settle at $81.57 a barrel on the NYMEX with futures expiration at the end of Thursday’s trading session after the latest storage report from the EIA. Last week the EIA … Continue reading “Around The Barrel – Crude Oil Market Outlook for The Week”
Into The Vortex – Natural Gas Outlook as Hurricane Season Arrives
Natural gas prices traditionally oscillate sharply this time of year between summer weather forecasts and supply. No different this year, ahead of the Juneteenth holiday NYMEX futures revered five days of falling Tuesday to close sharply higher. Weather models forecast US temperatures had shifted hotter for parts of the eastern and southern US from June 28-July 2. The National Weather Service (NWS) said that “the vast majority of the lower 48 US states could see above-average temperatures for the next … Continue reading “Into The Vortex – Natural Gas Outlook as Hurricane Season Arrives”
Into The Vortex – Natural Gas Production and Weather Outlook for Summer
Natural gas prices have had another volatile week after hitting 4-3/4-month prompt futures high on hotter-than-normal US temperatures forecasts from June 18-25. However, July Nymex natural gas on Wednesday closed down -2.68% on supply concerns. As of May 31, US natural gas inventories were up +13.5% y/y and were +25.1% above their 5-year seasonal average, signaling ample gas supplies. EQT Corp., the leading producer of natural gas in North America announced it is now reinstating the 1 billion cubic feet … Continue reading “Into The Vortex – Natural Gas Production and Weather Outlook for Summer”
Around The Barrel – Crude Oil Market Recap and Outlook for The Week with OPEC and STEO
EIA reported a US crude build of +3.730Mbbls fueled by a 2.6mbd increase in imports to 8.3mbd, the highest since 2018, while exports slumped to a two-month low at 3.2mbd. Gasoline stocks rose +2.566Mbbls. Distillates rose +0.881Mbbls in inventories. The WTI Futures Hub at Cushing stocks fell with a -1.593Mbbls draw. Domestic US oil production rose 100k to 13.2mbpd just off the all-time high 13.3mbpd. Refinery demand rose with refinery utilization fell 0.40% to 95%. There was +0.339Mbbls added to SPR inventory … Continue reading “Around The Barrel – Crude Oil Market Recap and Outlook for The Week with OPEC and STEO”
Into The Vortex – Natural Gas May Recap and Outlook for Summer
The EIA reported the natural gas storage build in the U.S. last week came in larger than expected with +98 Bcf in storage with consensus a build of +84 Bcf. For perspective in the same week last year stocks were +105Bcf, with a five-year average +103Bcf. The withdrawal season ended with stocks at the highest level in years. As of May 17, natural gas inventories were up +16.1% y/y and were +28.8% above their 5-year seasonal average, signaling ample gas … Continue reading “Into The Vortex – Natural Gas May Recap and Outlook for Summer”
Around The Barrel – Crude Oil Market Recap and Outlook for The Week Ahead
EIA reported a US crude build of +1.233Mbbls. Gasoline stocks rose +2.102Mbbls. Distillates rose +3.197Mbbls in inventories. The WTI Futures Hub at Cushing stocks rose with a +0.854M build. Domestic US oil production was unchanged at 13.1mbpd just off the all-time high 13.3mbpd. Refinery demand rose with refinery utilization rising +1.10% to 94.1%. There was +0.900Mbbls added to SPR inventory WoW. The market has refocused on the delay of possible rate cuts by the federal Reserve this year as inflation lingers. The … Continue reading “Around The Barrel – Crude Oil Market Recap and Outlook for The Week Ahead”