OIL: Analysts Split on Whether OPEC Return Supply as Planned in Q4
Aug-29 07:36
Analysts are split on whether OPEC will reduce its output cuts as planned from October, according to Bloomberg.
- A survey of traders, refiners and analysts showed 12 respondents expect OPEC will proceed, 11 expect it will postpone the output increase and 5 expect either a partial increase, or contingent on lasting supply disruption in Libya.
- OPEC provisionally plans to return 543kb/d of supply during Q4 but the group has previously stressed the policy remains flexible if the market appears to be oversupplied.
- Several OPEC+ delegates said they currently expect the hikes to go ahead, though at least one argued for a need to delay.
- The market outlook has seen bearish pressure in recent weeks with focus on soft demand growth in China, raising the prospects that OPEC many need to adjust the current plans.
- Some analysts forecast the global oil markets could switch from a deficit to a surplus next quarter if OPEC returns supply as planned.
- The next Joint Ministerial Monitoring Committee isn’t until Oct. 2 but further clarity could be expected in early September when new Saudi OSPs and allocations are announced.
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BONDS: Gilt/Bund spread leaning wider
Jul-30 07:34
- Small divergence in Bund and Gilt, supply could be limiting the upside in Gilt, while the lower Spanish inflation is keeping EGBs underpinned, is leaning the Gilt/Bund spread wider in early trade by 1.6bps.
- The spread now eye a test to 171.04bps, the July high and the widest traded level since 7th May.
SPAIN: GDP Outperformance Consistent With Survey Data
Jul-30 07:32
Spanish GDP rose 0.8% Q/Q for the second consecutive quarter according to the preliminary Q2 release. Bloomberg consensus had expected a 0.5% Q/Q reading. Spain is thus likely on track to outperform the other three major Eurozone economies again (based on the French Q2 prelim release and the German/Italian consensus prints), consistent with recent PMI data.
- INE noted that external demand contributed 0.5pp to GDP (with exports growing 1.2% Q/Q and imports falling 0.2% Q/Q), while domestic demand contributed the remaining 0.3pp.
- Within domestic demand, gross fixed capital investment grew 0.9% Q/Q while household consumption grew 0.3% Q/Q. Government consumption was 0.2% Q/Q.
- The softer household consumption growth (relative to other components) is consistent with recent survey evidence (e.g. consumer and retail sales) and hard data (e.g. retail sales).
- On the production side, all major sectors of the economy registered positive sequential growth in value added, led by manufacturing (1.1% Q/Q) and services (0.9% Q/Q). However, INE notes that the Q/Q growth rates for manufacturing and construction were over 1pp below the Q1 level.
- We will provide additional analysis on the income breakdown of GDP (i.e. the GDP deflator and its components) in the coming days.
USD: The Yen remains the worst performer
Jul-30 07:25
- Overall there's very little change for the Dollar against G10s so far, NZD was in the lead overnight and extended higher in early trade, and looks to challenge 0.5906, Friday's high, now up 0.39% vs 0.26% pre Cash European Govie open.
- The Yen is still the standout Currency, but has paired some of its weakness in the past 20 minutes or so, with the street looking pretty split on Dovish/Hawkish risks from the BoJ tomorrow.
