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On August 13th, Goldman Sachs analyst Robert Kaplan stated that the Federal Reserves decision not to raise interest rates in July was "absolutely" correct, and urged policymakers to remain open-minded until September, arguing that the factors influencing inflation are complex and that rigid forward guidance would be counterproductive. Kaplan stated, "If I see meaningful improvement, I might be willing to continue holding rates steady, but I want to make full use of every opportunity before September to make judgments, avoiding rigidity or preconceived notions." Kaplan believes current forces include: inflationary pressures from the development of artificial intelligence, tariffs, labor constraints, and soaring oil prices; meanwhile, AI applications are having the opposite effect, accelerating the downward trend in inflation. He suggested that Warsh should use his speech at this months Jackson Hole symposium to briefly explain the reasons for the Feds decision to hold rates steady in July, rather than giving a purely "philosophical" speech. Kaplan stated that his concerns about long-term US Treasury bonds outweigh his concerns about the federal funds rate itself. He stated that the global rise in long-term Treasury yields reflects a structural supply-demand imbalance driven by persistently large fiscal deficits, rather than Fed policy.An explosion occurred at a military factory near Rome, the Italian capital, on the 13th, according to Italian authorities. No casualties have been reported so far.The UK Maritime Trade Organization reports that the Iranian Revolutionary Guard continues to harass and monitor merchant ships, although no attacks were confirmed in the latest reporting period.Sources say Ukraines proposal was conveyed to Russia through a third party, but no response has been received yet.Bank of England Chief Economist Peel: UK economic growth provides a reason to raise interest rates.

Oil prices decline as the yuan increases and China's COVID-19 troubles intensify

Skylar Williams

Oct 11, 2022 11:35

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Oil prices fell by almost 2% on Tuesday, extending losses from the previous session, as a stronger U.S. dollar and an increase in COVID-19 cases in China fuelled fears of a global demand slowdown.


At 00:31 GMT, Brent crude futures fell 57 cents, or 0.6%, to $95.62 a barrel, after falling $1.73 in the previous session.


The price of U.S. West Texas Intermediate crude decreased by 55 cents, or 0.6%, to $90.58 a barrel, following a loss of $1.51 in the previous session.


The U.S. dollar rose for the fourth straight session on Monday as investors anticipated the release of high inflation statistics this week, resulting in the belief that the Federal Reserve will retain its aggressive monetary policy.


A strong dollar reduces the demand for oil by increasing its price for overseas consumers.


Monday, Lael Brainard, vice chair of the Federal Reserve, warned that recent rate hikes have begun to slow the economy and that the full impact of tighter policy will not be felt for several months.


ANZ Research analysts noted in a research, "Strong employment data has strengthened expectations for another 75 basis point rate hike at the Fed's meeting next month, generating negative risk for global oil demand."


Analysts said that China's continued zero COVID-19 policy prior to a Communist Party congress "does not assist" demand.


Since August, 19 cases have increased in the second-largest oil consumer in the world. For the first time in four months, its services activity decreased in September due to pandemic restrictions.


Since the beginning of October, thousands of cases caused by the highly transmissible Omicron sub-variants BF.7 have been documented in Inner Mongolia, making it the newest COVID epicenter in the country.


Last week, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, known collectively as OPEC+, decided to decrease their production target by 2 million barrels per day in an effort to prevent losses, thereby heightening fears on diminishing oil supplies.


"The supply concerns persist owing to sanctions on Russia, especially when the EU restricts Russian oil imports at the end of the year," said Tina Teng, an analyst at CMC Markets.


EU sanctions on Russian crude and oil products will take effect in December and February, respectively, and the bloc received final agreement last week for a new package of measures against Russia, including an export price ceiling.


Petroleum Minister Hardeep Singh Puri told Reuters that India has an "excellent relationship" with Russia and that it will assess any bids made following a restructuring of Sakhalin-1's ownership.


On Friday, Russia issued an order permitting it to seize 30% of Exxon Mobil's (NYSE:XOM) stake and granted a Russian state-owned business the authority to evaluate whether multinational shareholders, such as India's ONGC Videsh, may continue to participate in the project.

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