Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Crude oil grinds higher with focus on OPEC and trade talks
Ole Hansen
Head of Commodity Strategy
Summary: Crude oil continues to grind higher in the belief that a growth stabilising phase one trade deal can be reached. However we view the upside increasingly limited at this stage. Not least considering the prospects for another contentious OPEC meeting on December 5 and the emergence of several resistance levels.
Crude oil continues to grind higher in the belief that a growth stabilising “phase one” trade deal can be reached. Just like U.S. stocks the market has moved higher since early October when the potential for a trade deal began to emerge. Nearly two months later the prospect for a deal is being kept alive by both Washington and Beijing. Most recently with yesterday’s comment that U.S. and China “reached consensus on properly resolving relevant issues”.
The S&P 500 reached a new record before giving back some of those gains with the market beginning to show signs of trade talk fatigue. We worry that the eventual announcement of a deal may not be the game changer the market has priced in during these past couple of months. Instead it could see the market return to focusing on economic data which continues to weaken, not least in the U.S.
On that basis we see limited scope for Brent crude oil to break much higher. At least not before the December 5 and 6 OPEC meetings in Vienna where the focus is centered on the prospect for additional production cuts or at a minimum firmer compliance with the already agreed ceiling.
Supporting crude oil right now is the current market condition that remains reasonably tight due to strong seasonal demand. This is reflected in the elevated backwardation in Brent crude oil where the spread between the Feb-2020 and Feb-2021 contracts trades $4.8/b. The price difference reflects the return i.e. 7.5% a buyer can expect to achieve at unchanged prices over the next 12 months.
From a technical perspective Brent crude oil is now testing an area of resistance. The 50% retracement of the Aramco attack peak to the subsequent low is at $63.96/b (today’s high). Further resistance to be found at the 200-day moving average which is $64.50/b followed by the psychological important $65/b level which coincides the upper channel.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)