In today’s briefing:
- Payrolls Challenge Resilient Narrative
- US Dollar 2H25 Recovery To Continue
- CX Daily: Stablecoins Face Reality Check as Tech Gaps and Policy Firewalls Mount
- Americas/EMEA base oils demand outlook: Week of 4 August
- Asia base oils supply outlook: Week of 4 August
- Global base oils arb outlook: Week of 4 August
- Global base oils margins outlook: Week of 4 August
- Americas/EMEA base oils supply outlook: Week of 4 August
- Asia base oils demand outlook: Week of 4 August
Payrolls Challenge Resilient Narrative
- Revisions drove payrolls into a stagnation that runs contrary to our narrative of rolling resilience, but some contributors are spurious and don’t break the broader strength.
- Seasonal adjustment caused 76k of the 258k revision. State and local education workers represented 108k, and are lower since April, despite the DOE closure shifting jobs here.
- Payrolls still grow by 1% y-o-y, like household employment, with JOLTs data fine and the unemployment rate stable. The Fed should resist cutting without follow-through.
US Dollar 2H25 Recovery To Continue
- Our out-of-consensus forecast for the U.S. dollar trade-weighted index to strengthen in the second half is playing out
- Maintain an overweight position in unhedged U.S. equities and expect the Fed to cut interest rates by only 25 bps in 2025, providing additional support for the U.S. dollar.
- The biggest long term challenge to the US dollar is not gold but stablecoin and the changing global economic and geopolitical order.
CX Daily: Stablecoins Face Reality Check as Tech Gaps and Policy Firewalls Mount
- Stablecoins /Cover Story: Stablecoins face reality check as tech gaps and policy firewalls mount
- China-U.S. /In Depth: China, U.S. race to deny the other economic leverage
- Involution /: China acts to stamp out ‘involution’ and unfair competition
Americas/EMEA base oils demand outlook: Week of 4 August
- US base oils demand likely to stay lower amid signs of healthy availability of supply.
- Healthy availability of supply, buyers’ sufficient stocks and seasonal slowdown in consumption incentivize buyers to hold back.
- Ongoing fall in US base oils export prices adds to signs of weaker domestic demand.
Asia base oils supply outlook: Week of 4 August
- Asia’s Group II heavy-grade base oils price-premium to gasoil holds steady at lower level, close to levels in Q4 2024.
- Lower heavy-grade base oils margins and falling regional cargo price point to weaker supply-demand fundamentals.
- Even at lower level, price-premium remains at level that incentivizes refiners to maintain steady output of the product.
Global base oils arb outlook: Week of 4 August
- Group II heavy-grade base oils premium to light grades is almost the same in US, Europe and Asia markets at same time and for first time in more than five years.
- Similar price-spreads in all those markets contrast with diverging fundamentals driving those similar price-spreads, especially in Europe.
- Similar price-spreads in US vs other markets follow sustained weakness of US heavy-grade prices because of persistent surplus supply.
Global base oils margins outlook: Week of 4 August
- Global base oils prices mostly fall relative to feedstock/competing fuel prices, with export values under more pressure.
- Even at lower levels, price-differentials mostly hold at levels that sustain incentive for refiners to maintain output of most base oils grades.
- FOB Asia base oils cargo prices hold steady versus Singapore gasoil.
Americas/EMEA base oils supply outlook: Week of 4 August
- US base oils export price-premium to feedstock/competing fuel prices extends fall at end-July 2025.
- Weaker base oils export margins and signs of rising surplus supply could incentivize refiners to adjust output.
- Steadier domestic base oils margins, and steady removal of surplus supplies in overseas markets, could instead curb any such moves.
Asia base oils demand outlook: Week of 4 August
- Asia’s base oils demand could get support from moves to lock in supplies to meet seasonal pick-up in demand during final weeks of Q3 2025.
- Demand could have already got steady underlying support in recent weeks because of tighter-than-expected supply-demand fundamentals at start of Q3 2025.
- Persistently tighter fundamentals could prompt buyers to maintain higher stocks until they are confident about any sustained improvement in supply.
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