Category Archives:

oil

Lower oil prices for longer? The impact on emerging market oil producers

By Claudia Calich, Gregory Smith and Eldar Vakhitov

Market expectations of global oil prices have shifted several times already in 2020. The year started with short-lived scenarios of potentially higher prices, as tensions between the USA and Iran dominated the headlines. However, as COVID-19 tragically spread, the virus put a clear dent into expectations about global growth. Curfews and ef…

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Eskom, Pemex: two distinct stories but a similar root of problem

Fully government-owned corporate bond issuers (or quasi sovereigns) are one of the most interesting areas of emerging market debt investing, due to the hybrid nature of their credit risk: partly corporate credit, partly sovereign risk. Venezuela’s national oil company PDVSA is an example of what can go wrong, as it is in default. Bond investors are therefore currently spending more time looking…

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Diverging fortunes of inflation expectations in the US and Europe

Inflation expectations in the US and Europe have been diverging lately and it comes as no real surprise, of course. After all, annual GDP growth in the US was running at a healthy rate of 2.6% in real terms in Q4 2018. The unemployment rate has fallen below 4%, putting upward pressure on wages, while economic sentiment indicators, such as PMIs, are in firmly expansionary territory. In stark con…

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Panoramic Weekly: Brexit, May be yes, maybe not

After more than two years of bitter discussions, leadership battles, thousands of hours and millions of pounds spent on a divorce agreement between Britain and the EU, sterling barely blinked when a draft deal was finally struck. Investors held off in an uncertain environment, only to move quickly when further uncertainty unfolded: the pound sold off and gilts rallied after two cabinet minister…

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Fossil fuels – The end is nigh

Fossil fuels – The end is nigh

There’s no doubt that the oil industry has seen better days. Adding to present-day woes of price levels of $30-40 per barrel are questions about the long-term viability of the industry’s business model as a whole. Take for example the Rockefeller dynasty and Saudi Arabia, two names synonymous with gigantic fortunes built on oil. Well, the Rockefeller Family Fund just announced its intent to div…

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Why doesn’t the ECB just buy oil?

It’s pretty clear that the pressure is on the European Central Bank (ECB) to come up with some form of policy response at their next Governing Council meeting in March. Take, for example, the 5-year, 5-year EUR inflation swap rate (i.e., the swap market’s estimate of where 5-year inflation rates might be in five years’ time), which has taken a nose dive to 1.5% (see chart below). This is remark…

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