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Trade War Collateral Damage? | WTI Touches Highs as Iranian Conflict Continues

Published May 21, 2019
  • Chinese officials issued stern warnings that their country will retaliate against the US as the blacklisting of Huawei Technologies comes into effect. The US Commerce Department stated yesterday that a 90-day reprieve will be granted for certain US companies and customers using the manufacturer’s equipment. The escalation of the US-China trade war further adds to risks for an under-performing global economy, knocking expectations of a turnaround in the last half of the year.
  • Federal Reserve Chairman Powell spoke at a banking conference in Fernandina Beach yesterday, where he remarked at length of the many pitfalls of a high-risk corporate loan market and its similarities to the mortgage industry prior to the subprime crisis. Despite this, he stated that US regulators are monitoring this closely and that the financial system is better shielded.
  • The latest OECD report has indicated that trade tensions have derailed the global economy, subsequently plunging it towards a low-growth track. The report reiterates this negative tone and warned that trade disruptions could reverberate throughout developed and emerging economies.
  • West Texas Intermediate has rallied to the highest level since the beginning of May as it trades at $63.60. This move has largely been based on the rising tensions in the Persian Gulf with signals that OPEC will likely maintain a production cut. Markets are demonstrating increasing sensitivity towards a US military conflict with Iran that would involve a number of countries in the region.