Archive

June 30, 2025
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Oil: Revisiting My Forecast

  • Oil supply is projected to outpace demand growth through 2026, leading to rising inventories and sustained downward pressure on Brent crude to below USD60pb.
  • Opec+ output increases, quota disputes (especially with the UAE), and the potential unwinding of voluntary cuts could further flood the market.
  • US shale producers and international oil companies are reducing investment due to lower prices, but current Brent levels are not yet low enough to force significant cuts.

By Alastair Newton

June 25, 2025
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Defence Spending Is Not Stimulative

  • NATO raised its target for defence spending to 5% of GDP, with Spain opting out. This increases pressure for tighter monetary conditions than were otherwise appropriate.
  • Defence spending offers weak growth multipliers, so the policy is more likely to stoke deficits than productivity. Central banks may respond with a more hawkish stance.
  • With debt levels already high, the move risks crowding out other spending and lifting sovereign risk premiums. Bond yields suffer from higher deficits and future rates.

By Philip Rush

June 24, 2025
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Israel/Iran/US: Ten Pointers

  • ‘Events’ over the past four days have underlined how hard it is to forecast with any degree of confidence how the Iran/Israel conflict will unfold. However, and recent headline-driven volatility notwithstanding, the supply/demand equation continues to dominate market thinking on oil.

By Alastair Newton

June 23, 2025
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Growth Broadly Back In The Black

  • PMI recoveries extended in June, taking averages above 50 as manufacturing is its strongest since Sep-22, and services almost align with its averages of recent years.
  • The UK survey balances suffered from bad vibes, so they are the primary beneficiary of sentiment improving. Their recovery can extend further as vibes improve.
  • Broad expansion helps labour demand to keep pace with supply, denying doves proof of a disinflationary demand shock. Without that, cuts roll later and may not resume.

By Philip Rush

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