Oil To $100, Evergrande Shutout

Bullard: “Creating optionality for the committee will be really useful and that will be part of the taper debate as we think about how much signaling we are doing about future rate policy,”

Kaplan: concerns with a frothy housing market and the potential for easy policy to feed “excesses and imbalances.”

“What you are seeing ... is monetary policymakers simply reacting to the dramatically improved economic outlook.”

“I’ve been more of a fan of doing some things maybe to take our foot gently off the accelerator sooner rather than later so that we can manage these risks” and make it more likely that the Fed will be able to “avoid having to press the brakes down the road,”

Williams: “It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good,”

“But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery.”

Chinese junk bonds are underperforming regional peers this year, such as similar debt from India and Indonesia, said Kenneth Ho, head of Asia credit strategy research at Goldman Sachs.

Mr. Ho said yields on Chinese junk bonds were likely to stay high, and investors were likely to focus on trying to minimize their risks rather than maximizing returns. He said this meant they would probably seek to buy debt from a few specific borrowers that they know well, rather than investing broadly.

“Once we see signs of deleveraging from earnings reports and see idiosyncratic risks subside, then maybe valuations will get more people attracted to the market,” he said.

Several large Chinese banks are restricting credit to China Evergrande Group amid mounting concerns about the developer’s financial health, according to people familiar with the matter.

Three banks with a combined 46 billion yuan ($7.1 billion) of credit exposure to Evergrande as of June 2020 have decided in recent months not to renew loans to the company when they mature this year, the people said, asking not to be identified discussing private information.

The decisions were made before Evergrande’s bonds began tumbling at the end of May and resulted from banks’ internal risk assessments, the people said.

Three other banks are allowing Evergrande to roll over portions of credit lines it has already tapped but are limiting the company’s access to any untapped credit from those lines, the people said.

These banks decided against a more restrictive stance partly due to concern that a large reduction in lending to the world’s most indebted developer could destabilize China’s financial system before the politically sensitive 100th anniversary of the Communist Party on July 1, the people said.

Some Chinese trust firms -- the second-biggest lenders to Evergrande after banks -- have also been reassessing their exposure to the company, people familiar with the matter said.

One firm no longer considers guarantees from the group as sufficient for lending to its subsidiaries, focusing instead on the quality of collateral backing the loans.

Another is reviewing whether to issue new products tied to Evergrande.

Both firms are among the 10 largest providers of trust loans to the developer.

While the moves don’t by themselves suggest Evergrande is at risk of an imminent liquidity crisis, they do show the company faces dwindling options as it looks for ways to repay debt.

"We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices,"

The bank noted that U.S. shale will likely respond to these higher prices by ramping up production and Brent would roll back down to average $65 per barrel by 2023.

OPEC+ cut output by a record 9.7 million bpd last year as demand collapsed when the COVID-19 pandemic first struck.

As of July, the curbs still in place will stand at 5.8 million bpd.

On Tuesday, OPEC+ did not discuss output levels beyond August, three sources said. OPEC+ would next meet on July 1.