Edward Hayden-Briffett
Research Analyst, The Officials
Oil Near $90, European Heatwave May Wipe EU GDP Growth, Upcoming Data
Brent nears $90 as Libya attacks and weak Hormuz flows tighten supply; heat threatens EU growth, while Australia signals inflation risks.
Brent crude oil futures near $90/bbl as Libya’s oil infrastructure suffers drone attacks and traffic through the Strait of Hormuz remains extremely depressed.
US strategic crude reserves are under 300 million barrels for the first time since they were filled above that level in 1983.
The yen is softening again after last week’s US intervention in the FX markets. It climbed to over 159/dollar yesterday – but remains more than 5 away from its recent high.
Triodos Bank research suggests Europe’s extremely hot summer could wipe out all expected EU GDP growth this year. This is partly due to lost workforce efficiency and a much more severe impact on agricultural output. The UK spent 10% more at pubs in July, thanks to the FIFA World Cup, but overall consumer spending disappointed at 1% growth y/y.
Australia’s reserve bank left the interest rate at 4.35% for a second straight meeting. However, the Board doesn't see inflation back at the 2.5% target until late 2027, and said another hike could be needed.
Activity though is cooling: NAB confidence is stuck at -6, below its pre-war level and 0.8% m/m growth in household spending in June is the slowest since February. The annual spending figure, up 6% y/y, also looks strong but this is more reflective of higher prices inflicted by the US-Iran war.
As a result, the 10-year Australian government bond yield pushed back above 5%, toward multi-week highs, even as odds of another 2026 hike slipped to 40% from 50%.
Data today: ADP employment change, Redbook, Existing home sales
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