OIL: Crude Off Highs Following Progress On Ukraine-Russia Partial Truce
Mar-25 22:20
Oil prices finished moderately higher on Tuesday but off intraday highs following news of a partial Ukraine-Russia truce agreement. Russia has put conditions on the deal which have made it unclear whether it has actually been settled. The easing of sanctions on Russian energy still seems a long way off. Uncertainty over how global developments are going to impact demand and supply has limited moves resulting in benchmarks little changed over March.
- WTI rose 0.1% to $69.20 reaching a high of $69.68, breaching the 50-day EMA at $69.33, and then falling to $68.52. It is now down 0.2% this month. It has started today higher at $69.38 following data showing a US stock drawdown. The bearish trend remains intact though with the bear trigger at $64.85. A clear break of the 50-day EMA is needed to strengthen a bullish theme.
- Brent is up 0.25% to $73.18/bbl off the low of $72.50 which followed a peak of $73.57. The benchmark is now up 0.5% in March. Gains are still considered corrective though but if it maintains the break of the 50-day EMA at $72.83 then there could be scope for a stronger recovery. The bull trigger is at $76.78, 11 February high. Moving average studies remain in a bear-mode position highlighting a dominant downtrend. The bear trigger is at $67.33, 5 March low.
- The US has said that a truce has been agreed for the Black Sea to allow grain and fertiliser exports. There is some doubt over the agreement as Russia has said the deal depends on the lifting of sanctions on banks and companies that export agricultural products. It also includes a ban on striking energy infrastructure for 30 days.
- Bloomberg reported that there was a US crude inventory drawdown of 4.6mn barrels last week with 600k at Cushing, according to people familiar with the API data. Products continued to decline with gasoline down 3.3mn and distillate 1.3mn. The official EIA data is out later today.
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NEW ZEALAND: Retail Volumes Stronger Than Forecast, Discretionary Spending Firms
Feb-23 22:09
New Zealand Q4 2024 retail sales (ex inflation) were stronger than forecast, rising 0.9%q/q, against a 0.5% market expectation. The Q3 dip of 0.1%q/q, was also revised higher to flat.
- This was the firmest q/q print since the end of 2021. Stats NZ noted: "Ten of the 15 retail industries had higher retail sales volumes in the December 2024 quarter, compared with the September 2024 quarter, after adjusting for price and seasonal effects."
- "The biggest contributors to the rise in retail activity in the December 2024 quarter were: electrical and electronic goods retailing – up 5.1 percent, department stores – up 4.2 percent, accommodation – up 7.6 percent, food and beverage services – up 2.3 percent."
- This hints at some return of discretionary spending, with most of these categories negative in parts of 2024. This shows the impact of RBNZ easing beginning to benefit parts of consumer spending.
- The chart below shows the level of retail sales volumes. We are still comfortably sub 2021 cycle highs. In y/y terms, Dec retail sales volumes were close to flat.
Fig 1: NZ Retail Sales Volumes - Level
Source: MNI - Market News/Bloomberg
ASIA: Government Bond Issuance Today.
Feb-23 22:07
- Thailand to Sell THB3bn of 182-Days Bills
- Taiwan to Sell NT$30 Billion 5-Year Bonds
- China to Sell CNY102bn 2030 Bonds
- Philippines To Sell PHP 7.0Bln 91D Bills (PH0000058588)
- Philippines To Sell PHP 7.0Bln 182D Bills (PH0000059164)
- Philippines To Sell PHP 8.0Bln 364D Bills (PH0000059933)
- South Korea to Sell KRW1.4tn 5-Year Bonds
- Bank of Korea to Sell KRW500bn 91-Day Bonds
- South Korea to Sell KRW1.4tn 5-Year Bonds
BONDS: NZGBS: Bull-Flatter After US Tsys’ Rally, Real Retail Sales Beats
Feb-23 22:07
In local morning trade, NZGBs are 2-4bps richer, with the 2/10 curve flatter, after US tsys finished last week with solid gains.
- US tsys finished near session bests Friday, with second-half support spurred by risk-off sentiment as wires recirculated report of a new Covid strain out of China with "pandemic potential" (SCMP)
- Early Friday support for US tsys was triggered by weaker than expected data: flash S&P PMIs w/ composite at 50.4 (cons 53.2) after 52.7 in Jan, services (49.7 vs cons 53.0, after 52.9); and existing home sales were softer than expected in January at 4.08m (cons 4.13m) after an upward revised 4.29m (initial 4.24m). UofM data showed a worrying rise in long-term inflation expectations alongside a deterioration in consumer sentiment.
- NZ Retail sales ex. inflation rose 0.9% q/q (estimate +0.5% with a range of 0% to +0.8%) in Q4 versus a revised 0% in Q3. Core sales excluding fuel outlets and car yards rose 1.4% q/q versus a 0.6% contraction in Q3.
- Swap rates are flat to 4bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing is little changed. 27 bps of easing is priced for April, with a cumulative 59bps by November 2025.
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