Transport – Yields

Comments of particular interest are noted with ‘*’. 

Matau’s Comments:  

Sentiment is still distracting markets from fundamental conditions, [including several that are important to USA’s current tariff protection program] including issues with:

  • Brexit still being contested by the Parliamentarians (despite their own voters wishes).  When is the next British election?  [politics].
    • As I recall, PM Mays’ pre-referendum position was to stay in the EU, but when the majority of voters wanted to leave, she said … OK we will work to do that!  Apparently a leadership spill is in train.
  • North Korea and USA positions appear to be starting to move apart (again).  [politics].
  • USA sanctions on Iran are coming due to be reviewed (by Trump) soon.  [oil, steel, politics].
    • Iran has been one of the few nations contributing to growth in global steel production.
  • USA wants to retain right to re-impose tariffs on China, (but not to permit China to reciprocate)  … really?
    • The trade agreement negotiations are still in progress … [aluminium, oil, steel, et al]
  • USA sanctions / tariffs on Russia appear (at least in terms of traded goods) to be easing.  [oil, aluminium]
  • Venezuela is collapsing (USA has kept its sanctions there).  [oil, politics]
  • USA sanctions / tariffs on Turkey are hurting that emerging economy.  [steel].
    • Turkey has been one of the few nations contributing to growth in global steel production.

 

  • Base metal inventories remain tight, though prices are just starting to reflect those fundamental positions.  The uncertainties generated by the above geopolitical activities are hindering normal trading conditions.  
  • Gold price is as always not a predictable item, though gold is being sought by Central Banks, possibly as a ‘better’ asset than USD in the eyes of some nations. 
  • Regardless of the industrial commodity markets, the world will continue to require basic energy whether it grows or slows.  Whether the outlook is good or grim the custom, whether arriving at work, or at home, … is to turn the lights (and a few other thing) on.