metals

Our expectation is still higher prices but we're not quite sure what's going to happen in the near term over the next 3-5 months. Regardless of what happens in the second and third quarter, we're expecting stronger prices later because we don't see these economic political conditions improving. Acknowledges sharp recent rise and near-term uncertainty (consolidation/sideways possible), but maintains bullish medium/long-term view due to geopolitical risks, economic weakness, persistent inflation, and US election uncertainty. Discusses hedging strategies specifically because of vulnerability to downside after rapid price appreciation.

yields

We just don't see a big directional interest rate trade. The focus is on harvesting income from high nominal yields, not betting on rate direction.

wti

The price of crude oil goes up $3 a day, not every day $3, but averages rising about $3 a day until we get some kind of a movement of opening the ships If Iran deal fails and stalemate continues, oil shipments remain blocked, creating supply constraint that drives prices higher daily until resolution.

yields

I would still argue that in that type of world that interest rates are probably going to go higher just to hit their fair value, maybe closer to 5% Persistent 3%+ inflation environment with elevated risk premiums requires higher interest rates to reach fair value. Fed may need to hike rather than cut given nominal GDP growth outlook.

yields

Short term inflation expectations have moved up. Not by much though... long-term inflation expectations. Don't Budge, their well anchored... it is very important that Central Banks act carefully... they can take wait and see attitude... please don't rush. Georgieva explicitly describes anchored long-term inflation expectations and advocates for central bank caution against premature tightening. This suggests she expects yields to remain rangebound as central banks adopt a wait-and-see approach, balancing slight uptick in short-term expectations against growth risks.

wti

we would probably see them ratchet higher If US blockade of Iranian exports is fully enforced, it would tighten global energy markets and put more pressure on prices. Current price increase reflects announcement but market discounts severity.

wti

If there is one more month of closure in Hormuz, oil price will go back to $100 per barrel. And effectively every extra month of closure is an extra $15-$20.

wti

We're at day 30 and we're already up 40-50%. Refers to the current oil shock's magnitude and duration relative to historical averages.

yields

Supply shocks create inflation pressures and that creates upward pressures on rates.

yields

not only seeing yields go up Nominal GDP (real growth + inflation) is rising due to fears of more inflation than growth slowdown, driving yields upward. Market has shifted from expecting rate cuts to considering potential hikes.

ndx

directional equity convictions are neutral now for U.S. equities Neutral stance on directional US equities while focusing on thematic opportunities.

metals

Host Sam Vadas reported aluminum stocks rallied 10%+ due to Middle East supply disruptions, with Strait of Hormuz blockage potentially impacting 10% of supply. This points to upward price pressure on industrial metals from ongoing supply shocks.

wti

We are expecting for that paradigm shift in energy markets to occur. Brent prices go from like the 100-type levels per barrel to 150 per barrel in April. The base case scenario is shifting to the 'most bearish alternative scenario' due to the protracted conflict, indicating a near-term, sharp price increase is the firm's expectation.

yields

We've seen long-term interest rates rise by 25 basis points on the 10-year treasury... monetary authorities will suddenly have to hike. The stagflationary shock from the war (higher energy/food prices) combined with potential fiscal stimulus to buffer consumers will force monetary authorities to tighten policy to combat inflation.

ndx

With that comes a technology trade... when you're going through tough times, particularly from a macro perspective, tech is relatively macro-agnostic asset class... that's where investors will be focusing on in moments of difficulty. Sees US tech as a relative safe haven and beneficiary of a flight to quality/resilience within the US market during the shock.

wti

We would certainly assume at this point in a time that oil prices... will stay fairly elevated through the rest of the year even if the conflict comes to an end in the next few days. The shift in dynamic where Iran, not the US, can call the shots means supply disruption risks are more persistent.

wti

chances are that as this continue to drag on, then the... a medium to longer-term oil price expectations will start to change as well. Explicitly states that the prevailing expectation of a quick oil price drop is wrong and that medium-term price expectations will rise due to the protracted conflict and supply damage.

wti

The size of this oil shock is unprecedented. The Strait of Hormuz has not been closed before. 20% of oil production. That is very material. Describing the shock as 'unprecedented' and 'very material' directly references the cause of the sharp price increase.

wti

You get long, buckle your seat belt and hang on for the ride... the upside here, I would argue, is substantial. Again, we want to be long... We haven't even really started the rebalancing process yet. Argues the current ~$100 paper price is massively disconnected from physical markets (~$130-$170). Uses the mirror of COVID's -$37 rebalancing price to imply a need for very high prices to destroy demand. Points to physical prices (Oman $173, jet fuel $220-$230) as a leading indicator. Sees no spare capacity and a supply shock equal to COVID's demand shock.

wti

In the near term, higher energy prices will push up overall inflation... the substantial rise in oil prices caused by the supply disruptions in the Middle East. Powell explicitly confirms a substantial, near-term rise in oil prices due to Middle East supply disruptions, characterizing it as a shock that will push up inflation.

yields

Higher energy prices will push up overall inflation... We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks. Powell explicitly states higher energy prices are inflationary and the Fed is watching the data closely. With inflation already elevated and risks to the upside, the implicit direction is for potential upward pressure on yields if the inflation shock persists, though the Fed is not pre-committing.

wti

substantial rise in oil prices caused by the supply disruptions in the Middle East

yields

Committee decided to maintain the target range for the federal funds rate at 3.5 to 3.75 percent. Fed maintaining current policy rate suggests yields will remain stable in near term; no indication of imminent rate changes despite inflation concerns.

wti

Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East. The Fed explicitly cites a 'substantial rise in oil prices' as a current factor, attributing it to Middle East supply disruptions. This is a direct observation of a price increase that has already occurred and is impacting near-term inflation expectations.

yields

The median participant projects that the appropriate level of the federal funds rate will be 3.4% at the end of this year and 3.1% at the end of next year. Projected policy rate cuts imply lower short-term yields. The Fed's commitment to bringing inflation down suggests a dovish tilt, which would put downward pressure on the longer end of the yield curve over the medium term.

metals

Metals since 2020 are just a straight line going up... I want to own metal, I want to own gold Part of regime change to asset-heavy economy, cost structure rising, demand from EM diversification away from dollar assets

wti

Get long, buckle your seatbelt, hang on for the ride... I want to own oil Regime change structural shift, supply chain disruptions lasting months, hoarding adding demand, no policy solution, SPR inadequate

wti

There is no policy response that can stop this ascent and crude none. Massive supply chain disruptions (18M barrels/day), ineffective policy responses, and emerging hoarding behavior creating additional demand pressure.

wti

price of oil doesn't go much higher Gasoline prices already up 20 cents in 2 days, potential for more oil infrastructure damage from geopolitical events

yields

bonds could sell off some more Inflationary pressure from energy prices, Fed concerned about rising PCE, potential for further oil price increases