Something for Your Espresso – Are We Really Seeing Election Bets Now?

Good morning from Copenhagen.
There were dramatic scenes in oil yesterday, with crude down around 5% following rumors of Israel planning peace talks with Lebanon. There are a couple of support levels around these prices, but there aren’t many strong arguments for why oil should start gaining momentum from here, given that OPEC is still considering hiking production against what looks like a flat global demand outlook. Additionally, the geopolitical risk that has driven oil prices higher is rapidly diminishing as we approach the election.
If oil breaks lower, there is no support from a technical perspective, and we could very well be en route for USD 60 per barrel in Brent in such a case.
Chart 1.a: The divergence between oil and yields continues
The US 10-year yield took a breather yesterday after a strong 7-year auction, but there are reasons to believe the recent rally isn’t solely election-based.
0 Comments