Abans Group Commodity World Round Up

15 Mar - 19 Mar

1. Fed expects growth surge, inflation jump in 2021 but no rate hike

Mar 17, 2021

Fed officials, in fact, expect economic growth to remain above trend for at least two years to come, at 3.3% in 2022 and 2.2% in 2023, compared to estimated long-term potential growth of just 1.8%. While inflation is expected to jump to 2.4% this year, above the central bank’s 2% target, Fed chair Powell said that, this is viewed as a temporary surge that will not change the Fed’s pledge to keep its benchmark overnight interest rate near zero as part of an effort to ensure the economic wounds from the pandemic are fully healed.

Source: Reuters

2. Fed Signals Zero Rates Through 2023

Mar 17, 2021

Federal Reserve Chair Jerome Powell and his colleagues continued to project near-zero interest rates at least through 2023 despite upgrading their U.S. economic outlook and the mounting inflation worries in financial markets. U.S. central bankers left asset purchases unchanged at $120 billion a month and repeated that this pace would be maintained until “substantial further progress” is made on their employment and inflation goals. Powell told reporters that the Fed would signal well in advance when that threshold was on track to being achieved.

Source: Bloomberg

3. Gloomy demand outlook for oil after new restriction

Mar 19, 2021

Rising coronavirus cases, fresh restrictions and slowing vaccination rollouts in some countries is likely to reduce fuel demand. Safety concerns about the side effects of the AstraZeneca vaccine had led several European countries to stop administering the shot. Although Germany, France and other countries have announced the resumption of inoculations after regulators declared the AstraZeneca vaccine safe, the programme halt has made it harder to overcome resistance to vaccines among some of the population.

Source: Reuters

4. Gold Extends Drop as Treasury Yields Surge

Mar 18, 2021

Gold fell for second day as bond yields surged. On Thursday, yields on benchmark 10-year Treasuries climbed as much as 11 basis points to 1.75% -- the highest since January 2020 -- while the 30-year jumped to 2.5% for the first time since August 2019. The rise in bond yields has weighed on demand for bullion which doesn’t offer interest, although its role as a hedge against inflation has helped provide some support to prices. 

Source: Bloomberg

5. IEA: Asia To Account For 90% Of Global Oil Demand Growth Through 2025

Mar 18, 2021

Asia is expected to account for around 90 percent of the world’s growing oil demand over the next five years. Although demand may not increase at the same rate as pre-2019, growing populations will add significantly to the oil-needs of several Asian countries such as India and China. Also, the uptake of electric vehicles, driven primarily by Europe, China and the USA, is also expected to push down oil demand by 2030.

Source: OilPrice & IEA

6. BOE left the pace of its stimulus and rate unchanged

Mar 18, 2021

The central bank’s Monetary Policy Committee left the pace of its stimulus unchanged as expected, noting economic output fell less than anticipated in January while governments in the U.K. and U.S. both outlined plans for new spending. Minutes of the meeting mentioned “upside” risks seven times, up from two in February. The decision indicated that the BOE led by Governor Andrew Bailey is tolerating a surge in bond yields around the globe, seeing it as a reflection that the economic mood is improving. 

Source: Bloomberg

7. Stimulus may take time to show up, ECB’s Lagarde warns

Mar 18, 2021

The European Central Bank (ECB) may need some time before the recently agreed acceleration in the pace of money printing, part of its efforts to cushion the fallout of the COVID-19 pandemic, becomes apparent, ECB President Christine Lagarde said on Thursday. The ECB agreed last week to “significantly” increase its bond purchases to hold yields down, but Lagarde said it will be a while before this move shows up in the weekly bond-buying figures. The ECB also said it would use its 1.85 trillion Pandemic Emergency Purchase Programme (PEPP) more generously over the coming months to stop any unwarranted rise in debt financing costs.

Source: Reuters

8 .U.S. economy expands again in February

Mar 18, 2021

The U.S. economy grew again in February despite a bout of severe winter weather and it’s likely to gain speed in the months ahead as more Americans get vaccinated and nearly $2 trillion in fresh government stimulus is spent, a new survey showed. The leading economic index rose 0.2% in February, the Conference Board said Thursday. The board predicted the U.S. economy would expand by 5.5% in 2021. 

Source: Marketwatch