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Something for your Espresso: Balancing soft inflation and Houthis

The Red Sea tensions are growing amidst very soft inflation numbers. Is the duration rally at risk of being derailed?
2024-01-02

Morning and Happy New Year from Europe.

There has been plenty of action in the Red Sea over the New Years weekend and oil markets also react from the get-go of the year.

Satellite photos reveal that the re-routing of ships continues and geographical divergences are starting to show up in Dirty Suezmax prices, hinting of a rising price-impact of the turmoil.

Being long Energy is probably a decent hedging idea of long duration bets into January.

Chart 1: Rising divergences in Dirty Suezmax prices

The Red Sea tensions are growing amidst very soft inflation numbers. Is the duration rally at risk of being derailed?

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