Chart of the Day
It bounced slightly yesterday, but the US 5-year/5-year inflation breakeven – i.e. the inflation rate implied by bonds for the second half of this decade – has still fallen over the past couple of weeks. Conversely, the 5-year/5-year inflation breakeven rate from German bonds has been drifting up, and is now close to 1.5%. That is still lower than before Covid hit, and with Europe now experiencing rising Covid cases, the gap may not narrow much further.
Macro
Citi economic surprise indices have been falling across the world, although generally remain positive or neutral.
The weekly EIA report showed crude inventories rose by 2.1 mn barrels last week and are now 1.1% lower than their average at this time of year over 2017-19.
US crude production rose by 0.1 mn barrels last week – is a recovery on the cards?
Markets
Crude rebounded despite higher production.
Lumber has started to rebound.
Momentum stocks have regained the ground they lost to high-dividend value stocks after equities rebounded again yesterday.
A gap has opened up between wheat, which has risen lately, and corn, which has fallen.
Bitcoin bounced back above $30k, but is still lower than a week ago.
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