OIL: Oil Set for Another Big Weekly Drop (UPDATED)
May-02 04:23
- Oil had its strongest day of the week as WTI rose as further threats of Iranian sanctions permeated through oil markets.
- Trump stated clearly that the US will sanction any nation or person who buys oil or petrochemicals from Iran in breach of sanctions driving prices higher.
- Additionally, a prominent US Senator and known supporter of Trump has stated publicly that he has the commitment of 72 colleagues on a bill to further sanction Russia and those countries that continue to source their oil from the Kremlin.
- These threats added to the news overnight that April OPEC+ production fell by 200,000 barrels a day due to the winding down of operations in Venezuela by US producers as the threat of increased sanctions gets closer.
- US crude inventories declined by 2.7 million barrels, the biggest fall in more than a month, to around 440.4 million barrels. Refineries processed the most crude since 2019 for this time of year, with oil processing improving in all regions except the Midwest. Gasoline inventories saw a 4 million-barrel decline, driven by a large drawdown in the Midwest, to the lowest since late December.
- In a move that would add more supply to the global outlook, House Republicans plan to raise more than $15 billion in revenue through increasing US oil, gas and coal lease sales, as well as other measures, to help pay for President Donald Trump’s massive tax cut package, according BBG
- WTI finished the US trading session at US58.98 bbl yet has opened in the Asia trading day lower initially before rallying back in the afternoon to be +1.1% better
- Despite today’s gains, WTI is set for a decline of over 5% for the week.
- Brent had opened in the Asia trading session at $61.82 and climbed steadily throughout the trading day to reach $62.52, a gain of 1%.
- Despite the gain, Brent is on track for a loss of over 6% for the week.
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US TSYS: Cash Bonds Cheaper Ahead Of ADP Employment Data & Trump Tariffs
Apr-02 04:18
TYM5 is 111-16+, -0-08 from closing levels in today's Asia-Pac session.
- “Treasury 10-year futures are slightly lower in early Wednesday action but traders can see momentum building for a break above the 112 area and toward higher ground. The trigger is likely to be the fallout from the tariff announcements and responses from other nations.” (per BBG)
- Cash US tsys are ~2bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- The latest information includes: a CNBC reporter posting on X, citing Republican Rep. Kevin Hern, that the tariff rates announced Wednesday will be the highest they will go and countries can then take steps to bring the tariffs down.
- Today’s US calendar will see ADP Employment Change and Factory Orders data, and Fedspeak from Kugler on Inflation Expectations.
GOLD: Buyers Re-Emerge as Gold Surges in Afternoon Trading.
Apr-02 04:14
- Having hit $3,149.00 yesterday, gold retreated as profit taking set in and traders squared their positions ahead of the tariff announcements.
- Opening in the Asian trading session at $3,113.38, gold did very little in the morning session before a surge in afternoon trading to a high of $3,135.71, before backing off to $3,125.09
- As the gold price hits levels that were (for many forecasters) a year end target, BofA is the first to flinch, suggesting that gold could reach US$3,500.
- Up 19% year to date, Gold has surged over 3% in three trading sessions, prior to the decline into the US market close.
- Demand for Gold ETFs remains strong with assets under management growing by over 5% this year.
- Gold’s rally is impacting markets globally with South African mining stocks putting in their best monthly performance on record in March.
- Wednesday in the US sees the President announcing wide ranging tariffs on ‘all’ of America’s trading partners, a move that inevitably will see counter measures and bring with it volatility.
BONDS: NZGBS: Bull-Flattener Ahead Of Tariff News, May-32 Syn Tap
Apr-02 04:05
NZGBs closed mid-range, flat to 3bps richer, with the 2/10 curve flatter.
- Cash US tsys are ~2bps cheaper after yesterday's modest gains ahead of Wednesday afternoon's Liberation (tariff) Day announcement from the White House (1600ET est). Trump's tariffs will take immediate effect after they are announced.
- The NZ-US 10-year yield differential closed 3bps tighter +35bps after reaching the highest level since October last year yesterday.
- Today the NZ Treasury announced that an additional NZ$4.0bn of the nominal 15 May 2032 bond had been issued via syndicated tap. The bonds, which carry a coupon of 2.00%, were issued at a spread of 14bps over the 15 May 2031 nominal bond, at a yield to maturity of 4.3100%. Total book size, at final price guidance, exceeded NZ$18.3bn. There will be no further issuance of the bond prior to July 2025.
- Swap rates closed flat to 2bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed little changed. 24bps of easing is priced for April, with a cumulative 72bps by November 2025.
- Tomorrow, the local calendar will see CoreLogic Home Value and ANZ Commodity Price data.
