Something for your Espresso: Chinese deflation arriving in Europe but not in the US
Morning from Europe!
The talk of the macro/geopolitics town this morning is that Israel is pulling some troops from Southern Gaza
We subscribe to the slightly contrarian view that there is a pent-up demand awaiting to be unleashed in energy commodities, once/if a peace deal is reached including the return of safe shipping lanes.
A peace deal will likely lead to a surge in demand as everyone is currently sitting there waiting for Netanyahu to throw in the towel as “oil/gas prices will drop once a truce is found”.
When such a vanilla consensus is found already ahead of an event, the opposite typically happens.
Chart 1: Commodities and supply chains go hand in hand
The gap is growing between the US and peers. Both on inflation and unemployment. Will this lead to surprising rates decisions already this week? Meanwhile, we don’t think energy prices will drop because of Israel pulling out troops.
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