Risk Off Is The Dominant Theme

ICYMI - OPEC+ reached a deal yesterday. That's the supply side covered 👇

Risk sentiment is lower in Asia...

06:36BST

Usually, you could say that Asia is just catching up to the softer risk tone in the U.S. on Friday, but U.S. futures are down (Russell -0.7%)

And Europe is faring worse...

 European Opening Calls:#FTSE 6948 -0.85%#DAX 15431 -0.70%#CAC 6405 -0.85%#AEX 730 -0.86%#MIB 24542 -1.01%#IBEX 8430 -0.90%#OMX 2323 -0.70%#STOXX 4001 -0.87%#IGOpeningCall— IGSquawk (@IGSquawk) July 19, 2021 

Oil has also struggled since the open, even as analysts generally see the supply picture as a bullish outcome.

Goldman say the OPEC+ deal represents $2 per barrel "upside" to its $80 per barrel summer Brent price forecast and a $5 upside to its $75 per barrel forecast for next year.

So why is the price lower?

Demand concerns.

Delta variant, difficulty easing restrictions and high inflation are the main reasons floating around.

And these also explain the more generally negatively skewed risk sentiment we have seen lately.

This article is a little warning of the risks ahead...

It's only a 10% increase, and there's no imminent disaster looming large as banks will be offering support:

The bank on Sunday also said it would extend a moratorium on foreclosures of pandemic-affected owner-occupier borrowers until February next year.

The freeze on foreclosures was previously scheduled to end this September.

AMP Capital chief economist Shane Oliver assumed the Sydney lockdown could continue for seven weeks in total, and the total cost of all Australian lockdowns over the last year was probably about $10 billion.

Even so Dr Oliver said that cost was better than the alternative, and while there could be a hit to unemployment in the months ahead, the longer-term outlook for Australia’s economy was more positive as vaccination rates increased.

But it does highlight the difficulties in reopening, especially somewhere with low vaccination rates such as Australia.

We have already seen some restrictions returning in regions of Europe even with far higher vaccination rates.

Double-dip recessions alongside high inflation?

There is already talk of the RBA reversing their QE taper (RBA minutes tomorrow might be out of date before they're even released...)

TL;DR The virus matters again.

Which is why Freedom Day is SO important.

 Happy Freedom Day!

- Prime Minister in isolation

- Chancellor in isolation

- Health Secretary Covid positive

- Test and Trace still broken

- Scientists call England a ‘threat to the world’

- Experts say easing restrictions like building ‘variant factories’— Liam Young (@liamyoung) July 19, 2021 

Off to a good start...

Seriously, doom-mongers gonna doom.

It's not life back to normal yet, and won't be while people are told to self-isolate at these rates 👇

From the 16th of August, fully vaccinated people will no longer need to self-isolate after coming into contact with Covid positives.

This is crucial 👇👇👇

Telegraph

Tim Spector, the lead scientist on the app and professor of genetic epidemiology at King's College London, said: "Whilst the figures look worrying, it's important to highlight that vaccines have massively reduced severe infections and, post-vaccination, Covid is a much milder disease for most people.

As long as deaths and hospital admissions remain low, the path back to normal life is clear.

The UK is leading the world out (all it takes is a bit of determination)

Any return to restrictions in the UK would likely weigh on broader risk sentiment due to the implications for the global reopening.

Very quiet one on the calendar today.

Nothing significant until the PBoC meeting tonight.

Potential for a prime rate cut (following on from the RRR cut to improve liquidity)

Analyst View 👇

Pretty evenly split.

China cutting rates in response to a slowing economy surely wouldn't be positive for risk sentiment...

Earnings for today (and the rest of the week)