Archive

Oil: Wisdom of (Mohammed bin) Salman

• Most analysis of Opec+’s 2 November decision is as overly simplistic as the cartel’s public justifications. Calling an unwinding ‘time out’ in 2026Q1 is by no means unwise.
• Most notably — and despite continuing economic and political uncertainty — it is very likely that the market will be awash with oil in any case for some months to come.
• In other words, the cartel may already have done enough to achieve its primary objective, i.e. clawing back market share at the expense of US shale producers.

By Alastair Newton

Rebound To Resilience

• The diverging services PMI and ISM resolved bullishly in October, with activity broadly back to 2024 averages. The ISM headline still looks lower because it is a composite.
• Price balances remain extremely elevated while employment’s weakness has become less acute, skewing the trade-off more hawkishly for any policymaker’s preferences.
• The broader global deterioration in PMIs and unemployment last month also recovered in the latest round of releases. These data are not screaming for any more easing.

By Philip Rush

HEM: Nov-25 Views & Challenges

• Pushback by Powell and peers trimmed some excessively dovish pricing, but the BoE converged down on poor data.
• The BoE should also resist pressure as underlying issues are unbroken by relatively marginal recent payback.
• We now see markets overpricing easing most in the UK. More weakness is needed to signal a threatening trend.

Fed Cuts Amid “Data Fog”; Path Ahead Uncertain

• The Fed’s 25bp rate cut to 3.75–4.00% was anticipated, with the decision reflecting rising labour market risks amid the data fog.
• Policy outlook hinges on future data. Inflation remains sticky, but the labour market weakening drove today’s pre-emptive move.
• A pause in QT’s asset runoff demonstrates heightened caution. December’s decision is “not on a preset course”.