FREIGHT: Dirty-to-Clean Switches on Larger Tankers Help Tame LR Freight Rates
Jul-05 10:33
Dirty-to-clean switches have entered a new dimension, occurring on bigger tankers, Vortexa said.
- There are 15 Suezmaxes and 4 VLCCs which either have or are in the process of switching from carrying dirty to clean cargoes in 2024.
- These tankers predominantly originate from East of Suez and head towards West of Suez. Such switching is typically rare
- There are also 4 VLCCs that are likely to undergo Dirty-to-clean switching.
- Looking at the number of LR2s in the clean v dirty market, there had been almost no movement in the trend over the past two months, indicating little incentive to switch to the clean market.
- This means that East-to-West middle distillate flows can be satisfied with current tonnage supply.
- LR rates are already softening and opportunities for clean-ups on larger counterparts may diminish, Vortexa said.
Source: Vortexa
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BOC: Consensus Looks for Cuts, But Sizeable Minority See Threat of Delay
Jun-05 10:30
- Of the analysts surveyed in MNI's Preview, the majority see a 25bps cut to 4.75% today, however a sizeable minority see easing being delayed to July - or later. Indeed, many who foresee a June cut also acknowledge that a delay is possible today, but the progress on inflation and slowing GDP outlook has proved sufficient to begin easing.
- Those that see a delayed start to the easing cycle eye hawkish Fed re-pricing, concerns around widening pressures of the US-CA rate differential and the still-booming local housing market.
OUTLOOK: Price Signal Summary - USDJPY Key Support Remains Intact
Jun-05 10:18
- In FX, despite the pullback in EURUSD from yesterday’s high, a bull cycle remains in play. Recent gains have resulted in a break of 1.0895, the May 16 high and a bull trigger. This confirmed a resumption of the bull trend and a flag formation on the daily chart. Moving average studies are in a bull-mode set-up and highlight an uptrend. Sights are on 1.0933, 61.8% of the Dec 28 - Apr 16 bear leg. Support to watch lies at 1.0788, the May 30 low.
- The trend condition in GBPUSD remains bullish. This week’s fresh cycle highs and print above 1.2801, the May 29 high, confirms a resumption of the uptrend and an extension of the rising price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position, reinforcing current trend conditions. Sights are on 1.2859, 1.236 projection of the Apr 22 - May 3 - 9 price swing. Initial support to watch is 1.2693, the 20-day EMA.
- The trend outlook in USDJPY remains bullish and the latest pullback appears to be a correction - for now. This week’s breach of support around the 20-day EMA, has exposed key support at 154.66, the 50-day EMA, and 153.93, a trendline drawn from the Dec 28 low. A clear break of this key zone would be bearish and highlight a stronger reversal. For bulls, a move above 157.71, the May 29 high, is required to resume a short-term uptrend.
US TSY FUTURES: FV Blocked
Jun-05 10:11
Latest block trade lodged at 10:44:38 London/05:44:38 NY:
- FVU4 3,418 lots blocked at 106-14.75, looks like a seller based on prevailing prices at that time, but broader Tsy futures have ticked higher in the time since.
- DV01 ~$146K.
- That comes after an apparent ~$150K DV01 block buyer in the contract earlier in the London morning.
- 5-Year yields are trading ~5bp above May lows, with the latest flow looking for the move away from that extreme to extend.
Fig. 1: 5-Year Tsy Yields (%)
Source: MNI - Market News/Bloomberg
