OIL PRODUCTS: Diesel and Gasoline Cracks Edge Higher Ahead of Updated EIA Data
Diesel and gasoline crack spreads are edging higher today to maintain the tight supply driven strength ahead of further draws expected in the EIA US inventory data.
- European Gasoil time spreads are steady and holding onto the strong gains seen over the last couple of weeks.
- US distillates stock data last week was 14.5% below the five year average and gasoline stocks were 7.4% below.
- EIA data is expected to show a draw of -1.3mbbl in gasoline inventories and -0.27mbbl for distillates.
- Marathon expects its Galveston Bay 77.5kbd catalytic reformer shut by a fire since mid-May to remain offline all of Q3 with no indication of an expected timeline for return to operation.
- US gasoline crack up 0.2$/bbl at 40.16$/bbl
- US ULSD crack up 0.4$/bbl at 46.56$/bbl
- EU Gasoline-Brent up 0.5$/bbl at 25.62$/bbl
- EU Gasoil-Brent up 0.5$/bbl at 32$/bbl
- Gasoil AUG 23-SEP 23 down -1.75$/mt at 17.75$/mt
- Gasoil DEC 23-DEC 24 down -0.5$/mt at 83.75$/mt
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BONDS: Flattening as the market awaits US data
- There has been little in the way of headline drivers this morning with some better survey data out of Japan and China overnight equities are a bit higher (despite the mixed European PMI revisions this morning).
- Bonds have generally seen curves bear flatten as a result, with gilts the biggest movers, followed by USTs.
- Liquidity is likely to remain thin towards the start of the week with the US 4th July holiday tomorrow and half day today.
- However, we the focus will remain on US data this week as we will still receive the ISM manufacturing print today with ADP employment Wednesday, JOLTS and the ISM services print on Thursday and the US employment report on Friday.
- TY1 futures are down -0-7+ today at 112-01 with 10y UST yields up 0.4bp at 3.844% and 2y yields up 3.6bp at 4.936%.
- Bund futures are up 0.09 today at 133.83 with 10y Bund yields down -0.1bp at 2.389% and Schatz yields up 2.1bp at 3.209%.
- Gilt futures are down -0.07 today at 952.23 with 10y yields up 1.3bp at 4.396% and 2y yields up 4.6bp at 5.299%.
US TSYS: Early Flattening Deepens, SVB 2-/10-Year Curve Extremes In View
Tsys operate a little off London session cheaps. A tick away from session lows in European & U.S. equity futures applied some pressure before a block buy in TY futures (+10.9K) applied some counter. An uptick in oil futures is probably limiting the modest bounce in Tsys at present. That leaves TYU3 -0-07+, 0-04 off the base of its 0-09 range, while cash Tsys are flat to ~4bp cheaper as the curve bear flattens. The 2-/10-Year curve is ~1bp off March’s inverted extremes.
CNH: A Touch Lower To Start The Week, Although Bears Struggle Below 7.25
USD/CNH has ticked lower early this week, although the uptick in the broader USD since the Asia-London handover has seen the pair off session lows, last -100 pips around CNH7.2580, after a couple of shallow looks below CNH7.25.
- A firmer than expected USD/CNY mid-point fixing in CNY terms (310 pips under the BBG survey median), slightly better than expected Caixin manufacturing PMI data, Friday's positive equity lead and another light round of inflows into mainland equities via the Hong Kong Stock Connect schemes made for a generally supportive backdrop for mainland assets (CSI 300 +1.3%)/the yuan.
- State-run media pointed to the potential for the recent USD a/c deposit rate cuts in China to push back against one-sided expectations re: USD strength.
- While the long USD/Yuan idea is one of the more common views, the pair has continued to grind higher, lodging gains in 7 of the last 8 weeks, sitting above the previously well-defined technical uptrend channel.
- It will probably take more meaningful Chinese stimulus signalling and/or softer U.S. data outcomes/clear signalling from the Fed that it is done with tightening to turn the tide in the yuan’s favour.
Source: MNI - Market News/Bloomberg
