Tropical Storm Harvey inundates Houston and the heart of U.S. energy production, Donald Trump reiterates threats to quit Nafta and Jackson Hole hammers the greenback. Here are some of the things people in markets are talking about.
Harvey smashed ashore near Rockport, Texas, on Friday as a Category 4 hurricane and the strongest storm to hit the U.S. since 2004 then started dumping what could end up being about four feet of rain. Two deaths are attributed to the storm, which also halted a quarter of oil and natural gas production in the Gulf of Mexico and 5 percent of U.S. refining capacity. Energy, crops, livestock and drinking water are under threat, airlines canceled almost 3,000 flights and the White House said President Trump will travel to Texas on Tuesday.
More Oil Turmoil
The Americas aren’t the only oil-producing area to be hit with violent disruptions. Libya has had two more oil fields closed after an armed group took over pipelines to the deposits, further disrupting the OPEC nation’s plan to boost crude production. El Feel, or Elephant, and Hamada are shutting down and that comes after the country’s biggest field – Sharara has been shut for about a week after an armed group closed the pipeline that linked the deposit to an export terminal. Libya had boosted output to 1.02 million barrels a day last month, the highest in four years.
Wall of Worry
Trump was on the offensive again over the weekend about the North American Free Trade Agreement, calling it the “worst trade deal ever made” in a Twitter post on Sunday and saying the U.S. might have to just “terminate’’ the pact because Mexico and Canada were being difficult in renegotiation talks. He also doubled, or maybe by now that’s quadrupled down, on his determination to build a wall along the U.S.’s southern border and to make Mexico pay for it eventually. He didn’t elaborate on how he would do so – “through reimbursement/other” – but he did accuse Mexico of being one of the highest crime nations in the world.
The central bank gathering on Friday in Wyoming was all about what wasn’t said. Federal Reserve Chair Janet Yellen’s speech on financial stability was all about how post-crisis financial reforms made the banking system safer and more resilient. It was NOT about rate-hike chances, disappointing any who thought she might try to prop up the sagging odds in futures that there will be another one this year, so the dollar sank by the most in a month. The euro was at the forefront among majors, rising more than 1 percent as ECB head Mario Draghi said nothing dovish on the policy front and gave no indication he was concerned about the euro’s surge this month to a 2 1/2-year high. The shared currency responded by hitting a fresh peak.
U.S. Secretary of State Rex Tillerson signaled he is willing to look past the latest piece of provocation from Kim Jong Un’s regime to pursue negotiations to deescalate nuclear tensions on the Korean peninsula. North Korea fired three short-range ballistic missiles on Saturday, soon after Tillerson praised the hermit kingdom for showing restraint and suggested that dialogue could take place soon. Speaking to Fox News, Tillerson said after the tests that “I don’t know that we’re wrong” about his earlier assessment. “I think it’s going to take some time to tell.”
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Finland’s top private pension fund cut U.S. stocks, citing America’s leadership vacuum
- Treasuries traders gear up for debt deadline T-bill sale, inflation and payrolls data
- China’s rates mixup last week highlighted the PBOC’s opaque policy regime
- GE’s Jeff Immelt pulls out of Uber CEO application, as process nears completion
- German leader Angela Merkel signals openness to allowing lawsuits over diesel shenanigans
- Tencent’s Honour of Kings blockbuster spurs black market for virtual mercenaries
- U.K. prime minister attacks highly paid executives as unacceptable face of capitalism