Smartkarma Daily Briefs

• Global markets experienced a wobble following a stronger than expected US CPI inflation report, causing a spike in bond yields and a dip in equity markets.
• The US CPI report breaks the trend of positive data and has implications for the Fed’s rate cut decisions. While inflation is expected to moderate this year, it will take several data points to confirm this.
• The upcoming minutes from the January FOMC meeting will provide more details on the Fed’s thinking regarding rate cuts and adjustments to the pace of balance sheet rundown.

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• OPEC bullish on global oil demand growth, while IEA remains negative as it lowers its forecast from the previous report.
• US commercial crude inventories see stronger-than-expected buildup as refinery utilisation levels drop.
• OPEC is optimistic about the world economic growth in 2024 and 2025, increasing growth forecasts compared to the previous report.

• The copper market has experienced significant changes in the past few months, with supply constraints and increased demand from smelters in China.
• Major incidents, such as the suspension of production at First Quantum’s Cobra Panama mine, have contributed to a deficit in the market.
• Treatment and refining charges (TCRCs) have been on a downtrend, reflecting the tight supply and increasing demand, leading to more spot transactions in the market.

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• The transition to a low carbon economy, also known as the brown to green transition, involves moving from an economy based on fossil fuels with high carbon emissions to one with lower emissions.
• This transition will require a significant mobilization of capital, with estimates in the tens of trillions of dollars. Governments and the private sector are providing support and driving the change due to both funding and economic factors.
• In addition to investing in wind and solar infrastructure, the low carbon transition will require a significant amount of metals and materials. This includes steel, cement, rare earth, aluminum, silver, polysilicon, copper cabling, and more. The transition will create a more materials-intensive global economy.

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• EM credit spreads are already low, but the possibility of a Fed rate cut is still a key factor in the EM narrative.
• The Fed’s interpretation of inflation data is shifting, but there is not enough evidence to suggest a higher for longer regime.
• The trend of central banks allowing currency weakness has impacted EM FX performance, but FX reserves have not seen significant increases due to low commodities prices and a lack of capital inflows.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.