Inflation risks | 26 November 2021

#WTI:

Austria will become the first country in Western Europe to reimpose a full COVID-19 lockdown. Neighboring Germany warned it may follow suit, sending shivers through the oil market. Europe has again become the epicentre of the pandemic, accounting for half of global cases and deaths. A fourth wave of infections has plunged Germany, Europe's largest economy, into a national emergency, Health Minister Jens Spahn said, warning that vaccinations alone will not cut case numbers. This is a negative factor for the oil market. The total OECD commercial oil stocks down by 118 mb lower than the 2015-2019 average. In terms of days of forward cover, OECD commercial stocks fell 0.2 days, m-o-m, in October to stand at 61.5 days. This is a positive factor for the oil market.

Trading recommendation: range 74.10 - 78.10.

#SP500:

President Joe Biden's $1.75 trillion bill to bolster the social safety net and fight climate change passed the U.S. House of Representatives on Friday and headed to the Senate. Senate Democrats hope to reach agreement by the end of December with centrist Democrats Joe Manchin and Kyrsten Sinema, who have raised concerns about the bill's size and some of its provisions. The initial House passage complete and the recent enactment of a $1 trillion bipartisan infrastructure bill, Biden and his Democratic allies have considerable momentum as the measure approaches the finish line. Government spending will have a positive impact on the income of American corporations.

Trading recommendation: Buy 4699 and take profit 4754.

#JPMorgan:

Federal Reserve policymakers are publicly debating whether to withdraw support for the U.S. economy more quickly to deal with surging inflation. "I'll be looking closely at the data that we get between now and the December meeting, and it may well be appropriate at that meeting to have a discussion about increasing the pace at which we are reducing our balance sheet," Vice Chair Richard Clarida said at the San Francisco Fed's 2021 Asia Economic Policy Conference, noting that he and many of his colleagues see upside risks to already high inflation. "That will be something to consider at the next meeting. Earlier, Christopher Waller called for a the Fed to double up on its wind-down of bond purchases, finishing it by April to make way for a possible interest-rate hike in the second quarter of next year. This is a positive signal for US banks.

Trading recommendation: buy 158.50 and take profit 163.70.