In today’s briefing:
- US Debt Downgrade: No Impact on Fiscal Policy Conduct as US Equity-Treasury Valuations Turn Neutral
- Family Offices Don’t Like Commodities
- Asia base oils demand outlook: Week of 26 May
- Malaysia’s Rubber Sector In Flux As Q1 2025 Draws To A Close
- [US Crude Oil Options Weekly 2025/21] WTI Slips on Surprise Stockpile Surge and OPEC+ Supply Jitters
- [US Nat Gas Options Weekly 2025/21] Henry Hub Pared Gains to Strong Storage Build and Weak Demand
US Debt Downgrade: No Impact on Fiscal Policy Conduct as US Equity-Treasury Valuations Turn Neutral
- Historically, US sovereign rating changes have had no impact on fiscal policy conduct. Moody’s failed to downgrade the US sovereign credit rating when conduct was profligate during the Biden administration.
- The long end segment of the US Treasury yield curve has suffered the bulk of the fallout from the sovereign debt downgrade, although inflationary expectations in this segment remain well-anchored.
- The correlation between equities and Treasury yields has turned negative, implying headwinds for equities if yields rise. Valuations no longer favour equities against Treasuries for the first time since 2002.
Family Offices Don’t Like Commodities
- Investments in commodities and gold as a percentage share of family offices money remain very little, as this year’s Global Family Office Report by UBS shows.
- When asked how they are defying the volatile environment, respondents most frequently cite the selection of managers and/or active management (40%), followed by hedge funds (31%).
- Almost as many family offices are increasing their holdings of illiquid assets (27%) and more than a quarter (26%) are focusing on high-quality bonds with short maturities.
Asia base oils demand outlook: Week of 26 May
- Asia’s base oils demand likely to weaken in face of seasonal slowdown in consumption and rise in supply.
- Drop in lube demand likely to gather pace from start of Q3 2025.
- Drop in demand could be larger than usual because of weaker-than-expected economic growth.
Malaysia’s Rubber Sector In Flux As Q1 2025 Draws To A Close
- NR production plummets; export and import too down
- Ivory Coast once again pips Thailand in imports
- Nitrile gloves posing greater threat to latex gloves
[US Crude Oil Options Weekly 2025/21] WTI Slips on Surprise Stockpile Surge and OPEC+ Supply Jitters
- WTI futures fell by 0.7% for the week ending 23/May due to rising U.S. crude inventories and concerns over OPEC+ raining supply.
- The U.S. rig count fell by ten to 566. The oil rig count fell by eight to 465, while gas rigs also fell by two to 98.
- WTI OI PCR remained unchanged at 0.82 on 23/May compared to 16/May. Call OI rose by 4.8% WoW, while put OI grew by 4.7%.
[US Nat Gas Options Weekly 2025/21] Henry Hub Pared Gains to Strong Storage Build and Weak Demand
- For the week ending 23/May, U.S. natural gas prices remained flat despite having a volatile week. Hot summer forecasts were offset by a strong storage build.
- For the week ending 23/May, the EIA reported that U.S. natural gas inventories rose by 120 Bcf, moderately higher than analyst expectations of a 118 Bcf build.
- Henry Hub OI PCR fell to 0.89 on 23/May compared to 0.92 on 16/May. Call OI increased by 4.4% WoW, while put OI grew by 1.5%.
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