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On January 30, Elias Haddad, global head of market strategy at Brown Brothers Harriman, pointed out that if Warshs vision for Federal Reserve policy is implemented, the US yield curve may steepen further due to lower short-term interest rates, while long-term interest rates may remain stable or even rise due to insufficient credibility of US fiscal policy.On January 30th, Mark Dowding, Chief Investment Officer of BlueBay Asset Management, stated that the market widely expects Kevin Warsh to provide justification for a dovish stance, arguing that productivity gains from artificial intelligence will ensure inflation remains under control. Therefore, the futures market continues to anticipate two Fed rate cuts this year, consistent with expectations over the past few months. Compared to other potential candidates, Warsh is likely to be considered one of the less dovish ones. Previous interactions with other Fed members have shown that Warsh is highly respected, and his appointment as Fed Chairman is unlikely to pose a threat to the institutions independence.David Bahnsen, Chief Investment Officer of Barnson Group: Kevin Warsh enjoys respect and credibility in the financial markets, and anyone who gets the job (Chairman of the Federal Reserve) will inevitably lower interest rates in the short term. But I believe he will be a reliable candidate in the long run.Iranian Foreign Minister Araqchi: If necessary, we will strengthen cooperation with Türkiye.On January 30th, Trump announced his intention to nominate Kevin Warsh as the next Federal Reserve Chairman. Warsh served as a Fed governor from 2006 to 2011 and advised Trump on economic policy. He will succeed current Chairman Powell after his term ends in May, marking his return to the Fed. In 2017, Trump skipped Warsh and chose Powell instead. Warsh publicly advocated for interest rate cuts last year, aligning with Trumps stance and contrasting with his long-standing "hawkish" image. During his tenure at the Fed, Warsh consistently maintained a high level of vigilance regarding inflation and often supported higher interest rates. Trump previously stated that willingness to cut interest rates is considered a "litmus test" for the next chairman, raising market concerns about the potential damage to the Feds independence. Warshs Senate confirmation process may be further complicated by the Justice Departments recent announcement of an investigation into the Fed, with some Republican senators indicating they will block any Fed nomination until legal issues are resolved.

As nervous inflation counters good demand data, oil prices tumble

Skylar Williams

Sep 14, 2022 10:44

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On Wednesday, oil prices dipped somewhat due to concerns regarding faster-than-expected U.S. economic expansion. The CPI inflation data undermined OPEC's estimate of solid demand and evidence that U.S. gasoline demand remained robust.


London Brent oil futures fell 0.3% to $93.23 a barrel, while U.S. West Texas Intermediate futures climbed 0.1% to $87.39 per barrel at 20:59 EDT (00:59 GMT). On Tuesday, both contracts decreased as stronger-than-expected U.S. inflation data strengthened the dollar and spurred a sell-off across key asset classes.


Nonetheless, encouraging signals from the Organization of Petroleum Exporting Countries (OPEC) aided in preventing further oil price drops.


Despite inflationary challenges, the cartel noted in a monthly report on Tuesday that it expects oil consumption to climb gradually in 2022 and 2023 due to the resilience of major economies.


OPEC anticipates an increase in oil consumption of 3,1 million barrels per day (bpd) in 2022 and 2,7 million barrels per day (bpd) in 2023.


The American Petroleum Institute said that gasoline inventories in the United States continued to fall for the week ending September 9, indicating that consumers were encouraged by the recent reduction in fuel prices.


While overall U.S. oil inventories grew unexpectedly, a sizable chunk of this increase is likely related to a drawdown from the Strategic Petroleum Reserve.


It is anticipated that official data from the Energy Information Administration will reflect a weekly increase in oil inventories later today. Nonetheless, gasoline inventories are expected to decline.


As investors expected that rising inflation and interest rates would have a negative effect on crude consumption, oil prices have fallen from their early-year peaks. China, the world's largest oil importer, has had a rash of COVID-related lockdowns, casting questions on the sustainability of crude demand this year.


Rising interest rates may also induce a U.S. recession, which is projected to weaken demand. In response to Tuesday's CPI news, the markets are already pricing in a series of significant interest rate hikes this year as the Fed strives to rein in inflation.


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