OIL: Crude Stabilises Thursday Ahead Of US-Russia Meeting
Oil prices have stabilised during today’s APAC session. They have trended down for almost all of August on excess supply worries. On Wednesday US crude inventories rose more than expected and the IEA forecast a record market surplus for 2026. WTI is up 0.4% to $62.90/bbl but off its intraday peak of $63.00, while Brent is 0.4% higher at $65.90/bbl after reaching $65.98. The USD index is down 0.1%.
- The market is watching Ukraine developments closely with Presidents Trump and Putin meeting in Alaska on Friday.
- While Trump appears to see this event as the start of a process, any indication that a ceasefire is possible may weigh on oil prices as it increases the chance of an easing of sanctions on Russia. However, Trump has warned that there could be “very severe consequences” if Putin doesn’t agree to a truce. An extra 25% tariff will be imposed on India if there is no peace deal and India continues to buy Russian oil.
- Later the Fed’s Musalem (voter) and Barkin speak. July US PPI & jobless claims, UK Q2 GDP & June IP/trade, Q2 euro area/employment & June IP are released.
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AUSSIE BONDS: Cheaper, US CPI Tonight, PM Talks On China Relations
ACGBs (YM -3.0 & XM -1.5) are modestly cheaper with narrow ranges.
- Prime Minister Anthony Albanese said Australia values its relationship with China and will approach it in a "calm and consistent" manner. Albanese told President Xi Jinping that "dialog needs to be at the centre of our relationship" and he welcomes the opportunity to set out Australia's views and interests. (per BBG)
- Ronald Mizez (AFR) on LinkedIn: The Commonwealth Bank has urged Jim Chalmers to consider major tax reform to revive productivity, including slashing income taxes, overhauling the GST, capping superannuation concessions and introducing wealth taxes.
- Cash US tsys are little changed ahead of today's US CPI data.
- Cash ACGBs are 2bps cheaper with the AU-US 10-year yield differential at -5bps.
- The bills strip weaker, with pricing -2 to -4.
- RBA-dated OIS pricing is firmer across meetings today. A 25bp rate cut in August is given an 88% probability, with a cumulative 56bps of easing priced by year-end.
- Tomorrow, the local calendar will be empty.
- The AOFM plans to sell A$800mn of the 4.25% 21 March 2036 bond tomorrow and A$1100mn of the 1.00% 21 November 2031 bond on Friday.
US: Viewpoint On Potential Powell Firing
Jim Bianco wrote a thread on X on how the story of Trump potentially firing Powell is real and should be taken seriously.
- “The astute Washington Reporter @MarkHalperin runs the platform @2waytvapp, dedicated to politics and Washington. Regarding the Fed, this morning he changed his opinion in light of the events of this past weekend.”
- 2WAY on X: “I think it’s possible they will force Powell out,” says @MarkHalperin about Donald Trump’s campaign against the Fed chair. Says @SeanSpicer, “They are going to fire him for cause and claim he was irresponsible” with the costly renovations of the Fed’s headquarters.”
- ‘He used to think the Trump Administration was NOT going to fire Powell. Now he says they WILL move to force Powell out. Halperin said the next Treasury Secretary will be "another Trump Billionaire Buddy." Halperin said he "has a sense" of who it will be, but would not say. He did say it is a name that few people know.”
- “Let ME offer a name ... Kevin Warsh”
- “While Polymarket Betting on Trump removing Powell is below 50%, it remains in an uptrend. Why not greater than 50%? Many still believe Trump doesn't want to fire Powell; instead, he wants him to remain a punching bag.”
- “We'll find out shortly if this is a good assumption.”
BUND TECHS: (U5) Bear Cycle Intact
- RES 4: 131.95 High Jun 13 and the bull trigger
- RES 3: 131.33 High Jun 20
- RES 2: 130.76 High Jul 4
- RES 1: 130.06/130.31 20- and 50-day EMA values
- PRICE: 129.28 @ 05:36 BST Jul 15
- SUP 1: 129.08 Low Jul 14
- SUP 2: 128.97 Low May 14 and a reversal trigger
- SUP 3: 128.90 Low Apr 10
- SUP 4: 128.40 Low Apr 9
Bund futures are trading closer to their recent lows and a bear cycle remains intact. Last Friday’s extension resulted in a break of 129.30, the May 22 low. The breach strengthens the current bearish theme and exposes the next key support at 128.97, the May 14 low and a bear trigger. On the upside, resistance around the the 50-day EMA, at 130.31, marks the key short-term hurdle. A clear breach of it is required to highlight a possible reversal.
