«Brexit: The Marmite of politics»: The shadow of Brexit continues to loom large over U.K. markets as the consequences of the pound’s slide — with sterling falling below $1.215 in morning trading — are thrown into sharp relief by a dispute between retailer Tesco Plc and the Unilever group. The latter is reportedly seeking a 10 percent across-the-board increase in the prices of more than a hundred products to offset the recent exchange-rate shift, leading to a shortage of popular foodstuffs, including Marmite spreads. With analysts grappling with the inflationary and fiscal effects of the Brexit vote, politics will take center stage later today as a High Court challenge to Prime Minister Theresa May’s contention that Article 50 — the formal mechanism for leaving the European Union — can be triggered without parliamentary approval begins.
«China exports, yuan»: China registered in September the steepest monthly drop in its exports since February with a 10 percent year-on-year contraction in dollar terms compared with expectations for a 3.3 percent decline, underscoring lackluster global demand and adding to expectations that the yuan (already near a six-year low) will remain under pressure. «The numbers cut against the view that stronger competitiveness from a weaker yuan and more demand as U.S. households strengthen will return exports to a growth path,» Bloomberg Intelligence economists said. Efforts to cool the Chinese property market could see the yuan weaken by 17 percent over the next two years, according to Deutsche Bank AG.
«Fed minutes»: Minutes from the September meet of the Federal Open Market Committee published yesterday showed that several participants who backed the move to postpone an interest rate increase that month described the decision as a «close call,» buttressing market expectations for a December hike, with market-implied odds now at 68 percent. Underscoring expectations of a looming shift in the credit cycle, Pimco is turning defensive, focusing on «selective» opportunities in mortgages and inflation-linked bonds. Philadelphia Fed President Patrick Harker, who becomes a voting member of the FOMC next year, will express his views on the U.S. economic outlook in a speech at 12:15 p.m. in New York.
«No cut here: OPEC output hits new record high»:
The oil cartel increased its crude production to nearly 33.4 million barrels a day in September, it said in a report released on Wednesday.
That’s a new output record and 1.3 million barrels above last year’s daily production average.
The increase was fueled by Iraq, Nigeria and Libya, which have all suffered production disruptions because of conflict or terrorism. Iraq’s output soared by 100,000 barrels over the previous month to 4.5 million barrels a day.
Nigeria and Libya also added roughly 100,000 barrels a day to their production.
Saudi Arabia: We’re on track for oil supply cut by November
The new data show just how difficult it will be for OPEC to finalize its decision to cut production — the first such agreement in eight years.
The preliminary deal, struck last month, helped push crude prices to above $50 per barrel. But key details must still be agreed at the group’s next meeting in late November.
A global glut of oil supply caused oil prices to crash over the past two years, as the world’s biggest oil producers refused to cut production in order to defend their market share.
The strategy worked: OPEC now produces just under 35% of crude oil globally, compared to a low of 32.6% in April, 2014.
But low prices have been hurting the oil producing nations, forcing them to slash spending.
Saudi Arabia said Monday that efforts to get big oil producers to agree the details of the supply cut are on track.
The goal is to reduce production to between 32.5 and 33 million barrels of oil per day. But who will cut back, and by how much, is still to be determined.
Saudi Arabia, the biggest producer within OPEC, cut its production by 87,500 barrels a day in September.
The kingdom usually increases production during the summer months, when buyers fill stocks for the winter. It then lowers output slightly for the fall and winter months.