PVM Midday Report 13 June 2016
Headlines
OPEC hints at tighter oil balance in 2H 2016; output down 100,000 bpd in May
Chinese implied oil demand falls by 380,000 bpd in May y/y to 10.24 mbpd
Iran’s biggest oil…
The ECB once again felt the need to act in the face of falling consumer prices and anaemic growth as it surprised markets with its latest attempts to galvanise the region’s struggling economy. The measures included a 10 basis point cut to its three main interest rates to fresh historic lows and the announcement of a programme of asset-backed security purchases. The fallout was immediate and profound as the euro dropped 1.6% against the dollar to a 14-month low whilst yields on several short-term eurozone bonds fell into negative territory. The prospect of further liquidity did however act as a boon for European equities which surged to multi-year highs.
Events elsewhere were far more predictable, perhaps highlighting the diverging economic fortunes of the eurozone and wider global economy. The Bank of England opted to keep interest rates on hold despite the robust UK economic recovery whilst a solid ADP jobs report and strong service sector growth data for August confirmed the improving US economic outlook. Wall St initially took its cues from the rally across the pond but eventually faltered towards the close of trading as concerns over today’s US non-farm payroll report dented risk appetite.
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