In today’s briefing:
- [Counting Beans #2] Soybean Prices Maintain Support at USc 1,300
- Malaysia Politics: Cabinet Reshuffle Brings Upsides for Governance
- EA: German Reflation About to Blow
- UK CPI Watch – A Deflationary Shock?
- The Great Game – Funding for Ukraine Freezing
- IFO Nugget: Recession and Target Inflation?
[Counting Beans #2] Soybean Prices Maintain Support at USc 1,300
- Soybean futures maintained above USc 1,300/bushel indicating continued strong support at the level.
- Large export sales announcements continued over the last week, through November, net Soybean sales from the US were higher than their 5Y average. December pace remains strong too.
- CONAB cut production forecast for Soybean in Brazil due to unfavorable weather over November. Weather has improved recently with rains expected in key agricultural region.
Malaysia Politics: Cabinet Reshuffle Brings Upsides for Governance
- The installation of a corporate veteran as second finance minister is a welcome development to strengthen decision-making at the Malaysian treasury
- The return of experienced ministers from prior administrations also bodes well, while those perceived to be underperforming were demoted or removed
- Given the constraints of coalition government, Anwar had to maintain the balance of forces between the component parties. This was largely achieved
EA: German Reflation About to Blow
- The final EA HICP inflation print confirmed the surprisingly soft flash of 2.4% for Nov-23. Core inflation was also steady at 3.56%, while the HICPxT unsurprisingly hit 2.29%.
- The downtrend is still set to break in December on base effects from last year’s energy price subsidies in Germany. Underlying inflation mostly remains around 2% (annualised).
- Italy dipped low, which would warrant rate cuts in the unlikely event that it broadens and sustains. Wage pressures should pose resistance and discourage cuts until mid-24.
UK CPI Watch – A Deflationary Shock?
- We recently entered a long UK duration trade in anticipation of further disinflation in the UK, which so far has been a winning trade as the recent payroll data and waning price pressures has been in our favor.
- We see CPI headline -0.25% MoM, core -0.15% MoM and Services -0.15% MoM in rounded figures, well below consensus
- The path to 2% looks much more doable now than it did just 1 month ago in the UK given base effects
The Great Game – Funding for Ukraine Freezing
- Welcome to this week’s Great Game – your weekly geopolitics brief.
- This week, we take a closer look at the struggles of keeping up funding for the Ukraine War as well as the ongoing struggles in the Red Sea that we have predicted for several editions here.
- Let’s start in Washington: The recent Senate blockage of a vital funding bill, including aid for Ukraine, Israel, and Taiwan, alongside border security enhancements, has been a pivotal moment in U.S. politics.
IFO Nugget: Recession and Target Inflation?
- From the fresh IFO report details (on prices, orders and employment intentions), the majority of industries expect exports to decline in the months ahead.
- These include automakers, who had recently been assuming that exports would remain constant.
- Manufacturers of machinery and equipment are also expecting fewer orders from abroad, while energy-intensive industries such as the chemical, metal and construction industries are having a particularly tough time at the moment.
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