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Fri, 20th January 2017

Anirudh Sethi Report

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Archives of “The Surplus” Tag

Emerging Markets -An Update

  • The IEA forecast that the surplus in global oil markets will last for longer than previously thought.
  • Philippine President Duterte called for US troops to leave the southern island of Mindanao.
  • Relations between Poland and the EU are deteriorating.
  • Former head of Brazil’s lower house Eduardo Cunha was expelled and banned from public office for eight years.
  • Brazil’s central bank cut the amount of daily reverse swap contracts sold to 5,000.
In the EM equity space as measured by MSCI, Thailand (+2.2%), Qatar (flat), and Indonesia (-0.1%) have outperformed this week, while Colombia (-4.0%), Brazil (-3.4%), and Taiwan (-3.0%) have underperformed.  To put this in better context, MSCI EM fell -2.7% this week while MSCI DM fell -0.9%.

In the EM local currency bond space, South Africa (10-year yield -6 bp), Czech Republic (+1 bp), and China (+1 bp) have outperformed this week, while Hong Kong (10-year yield +20 bp), the Philippines (+18 bp), and Russia (+16 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 1 bp this week to 1.69%.

 
In the EM FX space, ZAR (+0.8% vs. USD), PLN (+0.7% vs. EUR), and CNH (+0.6% vs. USD) have outperformed this week, while MXN (-3.7% vs. USD), KRW (-2.1% vs. USD), and MYR (-1.4% vs. USD) have underperformed.

Oil – Preview of the U.S. Energy Information Administration (EIA) data

U.S. Energy Information Administration (EIA) data is out Wednesday morning (US time)

Ahead of that we’ll get a private inventory survey on Tuesday afternoon US time. Unfortunately that data is notoriously inaccurate.
S&P Global Platts (Futures Editor Geoffrey Craig) produce their own survey of what to expect:
  • Crude oil stocks expected to show a draw of 1.9 million barrels
  • Refinery utilization expected to decrease 0.2 percentage points
  • Gasoline stocks expected to drop 400,000 barrels
  • Distillate stocks expected to decline 500,000 barrels
Craig adds: