沙特能源设施遇袭停摆，原油逼近100美元

Good morning. It is Tuesday, September the 8th. Here's what's on the agenda. The yen continues to rally, closing in on its strongest level this year. Oil nears $100 a barrel as copper prices break new records. And Canada slaps retaliatory trade tariffs on the US. Okay, Tom, let's talk about some numbers. We are through 155. We're through 154. We are haveve got a 153 handle on dollar yen right now. We've had a touch below 153.

The high for the year or the low for the year depending on your perspective uh 15210. Are we going in that direction? There's some key moments coming up. Brent crude going towards 100. We've had reports out of Saudi this morning that a number of energy facilities are on fire. We'll come back to that story. Euros stocks 50 futures were a little softer. We don't have the catalyst coming out of the United States. It was it was closed yesterday.

We return with that trade a little bit later on. And there is a lot going on this morning. The countdown to the opening trade starts right now. So we saw the rally in the yen yesterday and that continues today. There's broader global ramifications arguably as a result of what we're seeing in this currency. Is 152 the next level? What does that do to the carry trade? borrowing in Japanese currencies, investing it globally.

Is there an unwind there? What does that do to treasuries, to US equities? How should we be thinking about a potential normalization in Japan? It's not 100% that we're there yet. We're going to have to get clarity from the BOJ. Do we need to see more than two hikes that are being priced this year to continue the upside? Does the pension fund need to start allocating more capital towards Japanese assets? There is a global picture as a result of what's happening with the Japanese currency and the strength in the last two days has been pretty remarkable.

I

I think there's some interesting things happening here. So to your point about the carry trade, if that gains momentum, does it kind of does that have its own momentum to it and how quickly could that happen? You got some really big events coming up though. Friday CPI is obviously going to be the big one. If that is soft, how does that affect this trade? If it's if it's a tough number though, if it's a high number, what does that do in terms of Fed pricing?

And I think that's going to be a factor that will weigh on this pair as well. Then, as you say, you get to the BOJ next week. The BOJ has to be quite hawkish next week for this trade to carry on. I there's a danger that this kind of peters out once again, but if you do get a a CPI that fits the narrative and then you get a really hawkish BOJ, potentially this thing has has legs and then that could really spin in uh to that trade around around what's happening with carry.

I think it's a really interesting what you say about it could peter out again because of course and your what you're referencing is recent history where we've seen that we've seen the strength of the yen and then and then it's peted out because the the structural factors are still there in terms of the trade deficit uh versus the US or the trade fundamentals versus the US and and to your point around the BOJ being hish what you're also saying there is yes the assumption is they hike but it has to be wrapped in continued hawish rhetoric they have to kind of convince the markets that this isn't just one just one more but they are prepared potentially to go to go further to normalize rates.

Do we get to 125? Do we get to 150 by the end of this year? How how much do you need to see on the hawkish side from the BOJ to convince the markets that this is going to be sustained?

Go to the PPP function on your Bloomberg. You'll see that the Japanese yen is way way way undervalued. So when the move happens, when it if it happens and it has legs, I the magnitude here could be really quite significant. I throw into the 140s people are talking about in terms of what where we could go with this. But you've got to get it going and we keep kind of trying and stopping and trying and stopping. But if we get there could be really interesting as you say global ramifications.

Talking of global ramifications, let's talk about what it's happening uh with the crude price. Uh and also actually what the wider commodity story is telling us right now. What it's telling us is that inflation is coming down the pike towards us. Uh you can see that in the product market when it comes to crude as well. Uh and you've heard from from Vital talking about just how tight that market is right now. Um crude is heading break crude is heading towards 100 it seems uh at the at the moment.

You've seen another move this morning to the upside. You got the Saudis talking about a number of their energy facilities being on fire this morning. Uh they've had to halt therefore action at those facilities. Is that another factor which could lift crude towards 100? Um there there is a there's again a lot going on. We're waiting to see what's going to be happening with the straight of Hmuz. We don't know what this immani Iranian deal could look like.

Is that going to open things up? Could there be further further issues um in in the Gulf of Oman? We don't know. So, there's a lot going on here, but but it does seem as if we're lifting ourselves back towards that 100 bucks a barrel mark. Copper's also on a tear at the moment. This is the AI trade. This is again just inflationary for the AI trade. Everything that goes into that electrification story, copper is a big part of it.

It's getting more expensive, therefore more inflation. The narrative again going into the Fed, going into the BOJ, going into all these ECB meeting, the the ECB meeting, inflation looks sticky at the moment, at least on the supply.

So how relevant is that CPI print on Friday if we're starting to see all these different dynamics? The reporting out the Bloomberg as well, there was one key line from the reporting on the energy space, the distillates, uh, US nationwide holdings of distillates, including diesel, which you've been focused on for a long time. at the lowest level for this time of year in at least a quarter of a century 25 years just let's include including diesel uh so there's there's the impact of course on on the economy of the US to what extent is this CPI print maybe going to be backward looking uh if all this inflation is coming is coming down the pike uh if you're looking for green shoots or at least some some some evidence that maybe some flows are continuing there's the L LNG for the first time uh in quite a while an LNG tanker loaded in Qatar and managed to sail through the straight of moose is is that just is that a one off or is there more?

Has the have the Qataris come to some kind of um agreement with the Iranians about getting getting some LG through the straight? We'll continue to monitor that. We're talking about all the inflationary impacts on this global economy. And then the Canadians slap retarity traps, which we knew about. They they knew they were coming. Uh there was there was some some debate as to whether or not they'd get some lastm minute deal with the US, but given it was a Labor Day holiday yesterday, that was looking unlikely.

So those retaliatory tariffs are now in place. um 15 15 to 50% up to 50% on some products including steel and motorcycles and US cheese. The I guess I guess the question for us now is is to what extent what how does the Trump administration respond to this?

Do you have an issue with US cheese? Sounds like you got a US does US have have good cheese?

I don't know. I think increasingly yes, but when we think about US cheese maybe no, but I think yes, they do now have quite good cheese. Cheese is important. Um

this is going to be interesting because it's also going to play in the midterms. So the Canadian tariff story is going to affect Michigan. There's a key Senate seat that is up there and you do wo