It turns out that what matters for implied volatility of oil is the slope of the crude futures curve. A futures curve in contango, where long-dated futures trade at a higher price than short-dated futures, tends to be associated…
Highlights Duration: Last week's bond market rout was driven by strong U.S. data. Global growth (ex. U.S.) continues to weaken. Weak foreign growth that migrates stateside via a stronger dollar remains the biggest risk to our below…
Highlights Macro outlook: Global growth will continue to decelerate into early next year on the back of brewing EM stresses and an underwhelming policy response from China. Equities: Stay neutral for now, while underweighting EM…
Highlights The risk of unplanned oil-production outages is rising. One or more such events will severely test OPEC 2.0's spare capacity in a supply-constrained market (Chart of the Week).1 As things now stand, OPEC 2.0 spare capacity…
Since 2017, the factor model used by our commodity strategists to forecast oil prices shows that brent prices have been supported by two drivers that are simultaneously pushing price estimates higher: First, strong…
With the loss of Iranian exports occurring faster and sooner than expected, and Venezuela remaining on the brink of collapse, senior energy officials from the U.S., Russia, Saudi Arabia are going to great lengths to reassure…
Highlights Recent estimates by ship trackers put the loss of Iranian exports at close to 1mm b/d as of mid-September vs April levels. This loss is higher (and sooner) than our previous baseline expectation, and prompts us to raise our…
Highlights Oil markets and U.S. monetary policy are tightening coincidentally. This confluence of events in the past typically presages an equity correction and recession in the U.S. in the following 6 to 18 months (Chart of the Week).…