By Bilal Hafeez 17-09-2019

Three Thoughts on the Oil Spike

(2 min read)
Resize text:


Oil prices have jumped significantly since the drone attack on Saudi oil facilities. But markets are so far taking a sanguine view of the moves and appear to be pricing the spike as temporary. Here are three other points to note:

1. US inflation expectations have picked up, but have been lagging behind oil moves for a while now. If we look at US inflation-linked bonds markets, we find that implied inflation expectations do generally move with oil prices. However, since June they have been lagging behind the moves higher in oil prices. This is still the case with the oil surge (see chart). The Fed will be heartened by this and will likely look past the inflationary impact of higher oil. Instead, they will focus on the negative growth implications and so tomorrow’s expected 25bps will probably be realized.

TO READ THIS HIVE EXCLUSIVE
SUBSCRIBE TO MACRO HIVE PRIME

£39/month thereafter

For access to our Slack Chat Room, where we discuss all things markets with our researchers and subscribers

START YOUR FREE TRIAL


MOST READ

Successful Start-Ups Build Strong Founding Teams (4 min read)

By Sam van de Schootbrugge | Feb 10, 2021
Start-up success hinges on many factors, but most would agree that the skills and experience of the founder and initial founding...

Where Will the Economy Find 10 million Lost Jobs? (3 min read)

By John Tierney | Feb 08, 2021
The headline January labour market report was another downer – private payrolls rose a scant 6,000 versus the consensus...

Where Can you Get Higher Bond Yields?

By Caroline Grady | Dec 04, 2020
US yields are rising. The combination of growing optimism over a global recovery given vaccine progress, and the possibility of a US...

PREMIUM CONTENT

BRL is Cheap, But Not Yet a Buy (4 min read)

By Reuven Benichou | Feb 26, 2021
Summary Petrobras CEO's dismissal could signal the…

Which Countries Will Reach Covid-19 Herd Immunity in 2021? (3 min read)

By Sam van de Schootbrugge | Feb 19, 2021
Summary Vaccination rollouts are accelerating, and global…

Want To Join Our Community Of Leading Investors And Researchers In Our Slack Chat Room?