Daily Market Color

OPEC Boosts Energy Sector, Trade War Concerns Linger


“Build them Here!”

Today’s episode of US tariff trade wars featured the EU, in which President Trump brought European car imports into the mix.  Responding to a series of retaliatory European duties (worth roughly $3 billion) imposed on American products, Trump tweeted-     
“Based on the Tariffs and Trade Barriers long placed on the U.S. and it great companies and workers by the European Union, if these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!”
This escalation is a far cry from the request made by German automakers earlier this week to abolish tariff imports completely.  Currently, the US imposes a 2.5% tariff on cars and 25% tariff on light trucks imported from Europe, while the EU imposes a flat 10% on both cars and trucks imported from the US.  The US dollar declined 0.45% against the euro on the day. 



Dow Snaps 8-Day Losing Streak

The DJIA posted its first daily gain in nearly two weeks as a surge in energy stocks boosted the index by 0.5%.  The S&P 500 finished with a more modest 0.2% rise, while the tech-heavy Nasdaq closed 0.25% lower in the final session of the week.  US Treasurys held within a tight range throughout the day, with yields/swap rates nearly unchanged at the close.  The yield on the 10-year note remained at 2.895%, roughly 3bps lower than its level to open the week.  For those dabbling in the cryptocurrency markets, bitcoin prices tumbled more than 9% today to a four-month low of $6,110.  Much of the decline was attributed to a regulatory decision in Japan, which forced a number of exchanges to cease opening new accounts while being ordered to make security improvements to their respective infrastructures.  



OPEC, Allies Come to Terms on Production

WTI crude futures surged nearly 5% to $68.75/barrel today, as OPEC and its allies were able to reach an agreement to increase production by…



The bump in output is representative of roughly 1% of the global supply, although the true rise is not expected be quite that high.  In actuality, the per day increase will be a more modest 600,000 – 800,000 barrels, as some members of the faction are unable to boost production at this point in time (see Iran, Venezuela, Libya) in accordance with the targeted levels.  As it stands, the agreement represents the first step towards easing the output-reducing pact made nearly two years ago between OPEC, Russia and its allies, which effectively cut production by more than 2% of the global supply at the time and helped to increase energy prices alongside the elimination of the supply glut.


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