“US President Joe Biden has condemned Big Oil for not producing more petrol amidst soaring oil prices, saying their rising profit margins at a time of war were ‘not acceptable’. Biden has called for ‘all reasonable and appropriate’ tools to be used to increase supply of gasoline in the near-term.”
US president Joe Biden took aim yesterday at refiners for not producing more petrol, saying their rising profit margins “at a time of war” were “not acceptable”. In letters sent to seven oil companies including ExxonMobil, BP, Shell and Valero, Biden called for “immediate actions” to supply more fuel, and said the administration was prepared to use “all reasonable and appropriate” tools to help increase supply in the near-term. Biden called on the refiners to explain why they had shut down some plants that make fuel, which had contributed to “an unprecedented disconnect between the price of oil and the price of gas”. US Energy Secretary Jennifer Granholm called an emergency meeting with refining executives for next week, a department spokesperson said today, as tensions between the Biden administration and Big Oil mount over soaring gasoline prices. The meeting will “discuss steps companies can take to increase refining capacity and output and reduce gas prices in the near-term,” an Energy Department spokesperson said.
The Bank of England raised interest rates by 0.25 percentage points today, moving more cautiously than other central banks while warning inflation would climb above 11% by the end of the year. The increase — the fifth time the BoE’s Monetary Policy Committee has tightened policy in back-to-back meetings — takes the benchmark rate to 1.25%. But, in a split vote, the committee held back from making a bigger 0.5 percentage point move, which won support from three members. Minutes of the MPC’s meeting painted a dismal picture of the outlook for both growth and inflation. While the committee warned price pressures were becoming more embedded, the majority judged that the economy was already weakening enough to bring inflation under control without more drastic action. Some analysts were critical of the BoE’s caution, saying it should have acted decisively to prove it would not tolerate double-digit inflation. But others said its approach reflected the UK’s economic outlook, which is deteriorating faster than elsewhere.
Stocks in Europe gained along with US equity futures, as traders caught their breath after a rout triggered by fears of an economic downturn. Treasury yields rose and the dollar rebounded from two days of losses. The Stoxx Europe 600 index jumped about 1.2% after hitting its lowest level in more than a year. S&P 500 and Nasdaq 100 contracts climbed more than 1%, signalling steadier sentiment compared with yesterday’s plunge in US shares to the lowest since late 2020. Markets are rounding off a week buffeted by interest-rate increases, including the Federal Reserve’s biggest move since 1994, a shock Swiss National Bank hike that energized the franc and the latest boost in UK borrowing costs. The rate hikes are draining liquidity, sparking losses in a range of assets. Global stocks face one of their worst weeks since pandemic-induced turmoil of 2020. The question is how far markets have to sink before the tightening cycle is fully priced in.
Sterling is weaker than most major currencies in the early morning trade. North Sea oil and gas producers have told UK chancellor Rishi Sunak they are rethinking projects in Britain because of a new 25% windfall tax on their profits, branding the policy “anti-investment” and “anti-business”. The UK government has committed to reform legislation covering credit cards and personal loans, as the Financial Conduct Authority called on lenders to provide greater support for customers struggling as inflation soars. The move comes as The Bank of England warned in a statement today that it expected inflation to rise above 11% before the end of the year – further fuelling the national cost-of-living crisis. Further exacerbating this, food prices will rise at a rate of 15% as households pay more for staples such as bread, meat, dairy and fruit and vegetables, the Institute of Grocery Distribution said.
The euro is stronger against sterling and weaker against the dollar this morning. The leaders of Germany, France, and Italy – all criticised in the past by Kyiv for support viewed as too cautious – visited Ukraine yesterday and offered the hope of EU membership to a country pleading for weapons to fend off Russia’s invasion. After holding talks with Ukrainian President Volodymyr Zelensky, the leaders signalled that Ukraine should be granted European Union candidate status, a symbolic gesture that would draw Kyiv closer to the economic bloc. Scholz said Germany had taken in 800,000 Ukrainian refugees who had fled the conflict and would continue to support Ukraine as long as it needs. Spanish power plants bought more natural gas to generate electricity yesterday than on any other day since records began. Extreme early summer heat is raising demand for electric air conditioning just as cheaper, renewable sources of power are contributing less to the system, meaning more expensive gas-fired plants are making up the shortfall.
The dollar is well bid against most major currencies overnight. Investors yanked billions of dollars out of corporate bond funds over the past week as unexpectedly high inflation data prompted an aggressive interest rate increase by the Federal Reserve, intensifying fears over a global economic downturn. Fed chair Jay Powell reiterated the central bank’s commitment to tackling inflation at its meeting this week, while also acknowledging that some of the drivers — like soaring commodity prices stemming from war in Europe — were outside its control. To add to this, lenders are also extending fewer loans to the car buyers with the riskiest profiles – a sign that they are bracing for an economic slowdown that could test people’s ability to pay their debts. Elon Musk warned Twitter staffers its business needed to “get healthy” and undergo a “rationalisation of headcount and expenses” as he addressed the social media platform’s employees directly for the first time since launching his $44 billion takeover bid.
FX Street Morning Report- 17th June 2022
GBP>EUR – 1.1689
GBP>USD – 1.2300
EUR>USD – 1.0526
GBP>CAD – 1.5955
GBP>AUD – 1.7577
GBP>SEK – 12.481
GBP>AED – 4.5156
GBP>HKD – 9.6540
GBP>ZAR – 19.535
GBP>CHF – 1.1887
· 9:00 a.m.: Turkey June inflation expectations for next 12 months
· 9:00 a.m.: ECB’s Simkus speaks
· 10:30 a.m.: BOE’s Tenreyro speaks
· 11:00 a.m.: Euro-area May final CPI
· 12:00 p.m.: UK sells bills
· 2:00 p.m.: Poland May CPI
· 2:45 p.m.: Fed’s Powell speaks
· 3:15 p.m.: US May industrial production
· 4:30 p.m.: BOE’s Pill speaks
· 6:00 p.m.: Russia 1Q GDP
- 7:00 p.m.: Baker Hughes US rig count
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