Author: focoachopn

Crude oil slumped on Saudi Arabia’s price cut, signaling the Kingdom has confirmed to accept lower oil prices for higher market share. The state-owned producer Saudi Aramco announced that it lowered the premium for Arab Light relative to US Gulf Coast benchmarks by –US$0.45/bbl to the smallest since December. Medium and heavy grades were also down –US$0.45 and extra light oil –US$0.5.

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WTI Broke Below US$80/bbl as Saudi Cut Prices

Encouraging US economic data and comments from Fed officials raised hopes of the central bank’s tightening. Treasury bond slumped with 10-year yield rising back to the level not seen since mid May. Weakness in US bonds also affected the European market where the 10-year bund yields also gained +4 bps although a soft inflation report in the Eurozone reinforced the need of ECB’s easing.

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Crude Climbed Higher as Driven by Encouraging US Data

Financial markets slipped although US economic data impressed, suggesting the negative impacts of the partial government shutdown were less severe than expected. Yet, this raised investors’ concerns that tapering might begin in as soon as December. On the other side of the Atlantic, Eurozone data disappointed, leaving room for the ECB to ease further.

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Disappointing EZ Data Fueled Easing Speculations

Last week began with further weakness of Japanese yen as G-20 statement largely shrugged off concerns over competitive currency depreciation in major economies. Release of the FOMC minutes caught most attention towards the end of the week.

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Weekly Fundamentals – Commodities Weakened amid Speculations of Fed’s Early Exit

The market was relatively quiet week with only second tier economic data released. Fed Chairman Ben Bernanke’s speech drove little reaction as investors turned the focus to Japanese policymakers’ intention in further monetary easing. Japanese yen plunged to the lowest level in 2.5 years ahead of the BOJ meeting next week.

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Weekly Fundamentals – PGMs led Rally in Precious Metal Complex

The FOMC and the SNB held policy meetings last week. The Fed expands the size of asset purchases by US$45B as Operation Twist expires by the end of the month. Purchases will be open-ended, additional to current purchases of mortgage-backed securities totaling US$40B per month.

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Weekly Fundamentals – Reaction of Fed’s QE Expansion Short-lived

Wall Street was firm amid new hope on fiscal cliff resolution and expectations of the Fed to announce asset buying at the FOMC meeting. These upstaged weaker-than-expected economic data.

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Financial Markets Gained on Fiscal Deal and Fed Easing Hopes

Commodities moved sideways in European sessions, although the debt agreement of Greece sent stocks higher. Gold price continued hovering around 1750, lacking the momentum to climb higher as physical demand remained weak with the drop in Indian buying.

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Commodities Move Sideways ahead of US Session

Financial markets begin the week with modest downward bias as China’s “beige book” showed more payroll cuts ahead. German newspaper Der Spiegel reported that Greece has a budget gap of 20B euro.

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Financial Markets Lowered amid Concerns over Chinese Growth, Eurozone Debt Problems