Abans Group Commodity World Round Up

2 May – 6 May

1 .BoE flags risk of recession and 10% inflation as it raises rates again

5 May 2022

The Bank of England sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates on Thursday to their highest since 2009, hiking by quarter of a percentage point to 1%. They also trimmed bets on the central bank hiking rates aggressively this year. Short-dated British government bond yields slid sharply. The BoE's nine rate-setters voted 6-3 for the rise in Bank Rate from 0.75%, with Catherine Mann, Jonathan Haskel and Michael Saunders calling for a bigger increase to 1.25%.

Source: Reuters

2 .US Fed raises rates by 50 bps, biggest hike in two decades

4 May 2022

The US Federal Reserve raised the benchmark lending rate by 50 basis points, in what is being viewed as the sharpest increase in over two decades. The increase in the Fed’s key rate raised it to a range of 0.75 percent to 1 percent, the highest point since the pandemic struck two years ago. The half-point surge, the most aggressive since 2000, suggested that further large rate hikes are likely to come. The Fed also announced that it will start reducing its huge $9 trillion balance sheet, which consists mainly of Treasury and mortgage bonds. Those holdings more than doubled after the pandemic recession hit as the Fed bought trillions in bonds to try to hold down long-term borrowing rates. Reducing the Fed’s holdings will have the effect of further raising loan costs throughout the economy.

Source: Reuters

3 .Australian central bank lifts interest rate for 1st time in over decade

4 May 2022

After dropping interest rates down to historic low levels during the Covid-19 pandemic, the Reserve Bank of Australia (RBA) has lifted interest rates by 0.25 to 0.35 per cent, the first rise since 2010, in an effort to calm growing inflation. RBA Governor Philip Lowe said it was now "the right time" to withdraw accommodative monetary support designed to help the Australian economy through the pandemic, Xinhua news agency reported. Figures released by the Australian Bureau of Statistics last week showed inflation had reached a two-decade high of 5.1 per cent in the last 12 months. This has prompted widespread calls for the central bank to step in to deal with inflation that has begun to stretch the budgets of Australians. The RBA Governor said while the Reserve Bank expects further rise in inflation in the short-term as supply-side demand is resolved, inflation is expected to return to the RBA's target of 2 to 3 per cent.

Source: Bloomberg

4 .Reserve bank of India hikes repo rate by 40 basis points in emergency meet

4 May 2022

In an unscheduled press briefing the Reserve Bank of India (RBI) to hike rates. The policy repo rate has been hiked by 40 bps to 4.40% with immediate effect. The standing deposit facility rate is now at 4.15% while the marginal standing facility rate and bank rate stand at 4.65%. The RBI also hiked the cash reserve ratio (CRR) by 50 basis points to 4.5% effective May 21. The withdrawal of liquidity due to this hike would be to the order of Rs 87,000 crore.

Source: Economic times

5 .ECB sees sequence of moves to lift rates into positive territory: Lane

5 May 2022

The European Central Bank is preparing for a sequence of rate hikes that will put its benchmark rate in positive territory. With inflation soaring to a record high 7.5% last month, policymakers have advocated a quicker exit from stimulus.  ECB chief economist Philip Lane said that minus 0.5% (deposit rate) is not in line with the 2% inflation target. He further said that if inflation is going to be stable around 2%, minus 0.5 is not consistent, zero is not consistent.

Source: Reuters

6 .OPEC+ sticks to modest oil output hike despite price rally

5 May 2022

OPEC+ agreed to another modest monthly oil output increase, arguing that the producer group could not be blamed for disruptions to Russian supply and saying China's coronavirus lockdowns threatened the outlook for demand. Ignoring calls from Western nations for accelerating output hikes, the group agreed to raise its June production target by 432,000 barrels per day, in line with an existing plan to unwind curbs made in 2020 when the COVID-19 pandemic hammered demand.

Source: Reuters

7 .EU to propose ban on oil imports from Russia

4 May 2022

The European Union announced a new round of sanctions today against President Putin’s regime as Russian forces continued to unleash artillery fire on towns in Ukraine, killing and wounding dozens of civilians. Under the ban, crude oil imports will be embargoed after six months and refined petroleum products such as gasoline after nine months with longer phase outs to cushion the effect on some central and European countries.

Source: Bloomberg

8. Venezuela's oil exports fall 8% in April amid quality-linked delays -data

5 May 2022

Venezuela's oil exports fell 8% in April from the previous month amid continued delays linked to poor-quality crude grades and insufficient oil upgrading capacity available, according to documents and vessel monitoring data on Thursday. State-run oil firm PDVSA and its joint ventures exported an average of 644,870 bpd of crude and refined products last month, with over 70% of shipments sent to China directly or through trans-shipment hubs like Malaysia, according to PDVSA's internal loading schedules and Refinitiv Eikon tanker tracking data.

Source: Reuters