Archive

Oil: Revisiting My Forecast

• Oil supply is projected to outpace demand growth through 2026, leading to rising inventories and sustained downward pressure on Brent crude to below USD60pb.
• Opec+ output increases, quota disputes (especially with the UAE), and the potential unwinding of voluntary cuts could further flood the market.
• US shale producers and international oil companies are reducing investment due to lower prices, but current Brent levels are not yet low enough to force significant cuts.

By Alastair Newton

HEW: Incentives To Ignore Macro Data

• Rates were repriced lower without new data to justify it. Trump incentivises doves with a possible early Fed Chair decision, and the two FOMC outliers revealed themselves.
• PMIs extended their recovery in the June flash. Mexico and Thailand matched market calls, but the former signalled slower easing and US trade policy risks reduced further.
• Next week lacks central bank decisions, but US payrolls and EA inflation data are critical to perceptions of the outlook, including our contrarian calls for no more cuts.

By Philip Rush

Mexico: 50bp Rate Cut To 8% (Consensus 8%) in Jun-25

• Banxico cut rates by 50 basis points to 8.00% as expected, but Deputy Governor Jonathan Heath's dissent signals growing concern about aggressive easing while inflation remains at 4.51%.
• The central bank raised year-end inflation forecasts to 3.7% from 3.3% while maintaining that convergence to the 3% target will occur by Q3 2026.
• Removal of language about future cuts of "similar magnitudes" suggests a shift towards more cautious easing amid trade policy uncertainty and persistent inflation pressures.

Thailand: Policy Rate Held At 1.75% (Consensus 1.75%) in Jun-25

• The Bank of Thailand maintained its policy rate at 1.75% by a 6-1 vote, in line with expectations, citing robust first-half growth but heightened risks from US trade policy and global uncertainties.
• Despite raising its 2025 growth forecast to 2.3%, the MPC flagged a likely economic slowdown in the second half of the year, subdued inflation well below target, and negative credit growth as key factors influencing future rate decisions.
• The Committee signalled a data-dependent approach, preserving limited policy space and indicating that further rate cuts would require a significant deterioration in growth or inflation outlook.