Joe Biden Vows US Will Support Ukraine ‘Until They Prevail In This War’

Political

Russia-Ukraine Conflict

Summary:

President says Washington will send more Patriot air defence systems to Kyiv as G7 steps up support.

Joe Biden has pledged support from the US and its allies for Ukraine “until they prevail” in the war against Russia’s invasion and said Washington would send more air defence systems to Kyiv after signing a 10-year defence pact with Volodymyr Zelenskyy.

The US president’s comments and the deal with his Ukrainian counterpart marked a show of unity between the leaders following tensions between Washington and Kyiv in recent weeks.

Biden and Zelenskyy announced the deal on the sidelines of the G7 summit in Puglia, Italy, as the group of leading advanced economies announced new measures to support Kyiv and punish Russia for its two-and-a-half year long military invasion of Ukraine.

The G7 had taken “major steps” at the summit that “collectively show Putin that he cannot wait us out, he cannot divide us and we will be with Ukraine until they prevail in this war”, Biden said.

During the summit, G7 countries approved a new scheme to send $50bn in loans to Ukraine backed by proceeds from frozen Russian sovereign assets, and some increased sanctions on Moscow and international networks aiding its war.

Biden also said he had secured commitments for the delivery of additional air defence systems to Ukraine — including Patriot missile batteries Kyiv has been clamouring for after Russia escalated its aerial attacks on critical infrastructure.

Biden said five countries had agreed to send Patriot and other air defence systems to Ukraine. Other countries expecting the delivery of US air defence systems would have to wait because “everything we have is going to go to Ukraine until their needs are met”, he said.

Ukraine would begin receiving some of the systems “relatively quickly”, he said.

Biden’s comments were his most emphatic on US support for Ukraine since Congress approved a $60bn aid package for Kyiv in April, handing the country much-needed military support after months of delay and political wrangling in Washington. During the winter months, US aid had slowed to a trickle and the US president toned down his pledges to Kyiv.

A Biden administration official later told the Financial Times that the US was “working toward a significant announcement at the Nato summit [in July] . . . but we are not waiting for the summit to start moving systems”.

Zelenskyy had recently been bruised by Biden’s decision to skip a peace summit organised by Ukraine in Switzerland at the weekend and return to the US for an election campaign fundraiser in California. Kamala Harris, US vice-president, will attend the conference instead.

But in a move that was welcomed by Kyiv, the US authorised Ukraine to use some American weapons to strike military targets inside Russia in the area across the border from the northeastern Ukrainian city of Kharkiv.

The security pact agreed in Italy falls short of the mutual defence guarantee that Ukraine would be part of if it joined Nato, though the US did pledge that the country’s “future” lies inside the transatlantic alliance.

But it does commit the US to help develop Ukrainian military capacity beyond the support it has given Kyiv since Russia’s full-scale invasion, including boosting its air defence, munitions stockpiles, ability to deploy modern fighter jets, cyber defence and its naval force in the Black Sea.

The deal, first reported by the FT last month, commits the US to “deter and confront any future aggression against the territorial integrity” of Ukraine and “assist Ukraine in maintaining a credible defence and deterrence capability”.

Among the pact’s provisions is a boost to intelligence sharing and military training. Ukraine made new pledges on economic and political reforms, including the implementation of “robust” anti-corruption measures.

The US and Ukraine also agreed to “co-operate to advance a just and lasting peace that has broad global support” — solidifying Washington’s vow not to force Kyiv into a peace deal with Russia without its consent.

But one ominous provision of the agreement says it can be terminated with six months notice, meaning it could be in peril if former president Donald Trump, a sceptic of Ukraine aid, defeats Biden in the US election in November.

Zelenskyy said in the press conference on Thursday that the G7 had agreed to find Ukraine another five of the seven Patriot air defence systems he requested. The US-made systems have been highly effective at protecting Ukraine from daily barrages of Russian missiles.

While Kyiv has enjoyed relative protection from Russian missiles since the systems first arrived in spring 2023, other Ukrainian cities without them, such as Kharkiv, have been repeatedly struck, decimating energy and civilian infrastructure.

Ukraine has at least four Patriot batteries provided by the US and Germany with one more on the way from Berlin. Zelenskyy said Ukraine needed 25 Patriot air defence systems to protect the country from Russian air strikes. But he has said seven would be enough to protect Ukraine’s most critical infrastructure.

Source:Financial Times

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Glendon

Economic

Rubrik, Inc. (RBRK) has emerged as a prominent player in the rapidly growing cloud data security market. This article delves into Rubrik's business model, its financial performance, recent developments, and key factors for investors to consider before making investment decisions.

Rubrik's Value Proposition: Simplifying Cloud Data Security

Rubrik offers a cloud-based data security platform designed to simplify data protection, backup, and recovery for businesses. Their flagship product, the Converged Data Management platform, provides a unified solution for:

Data Backup and Recovery: Ensuring data availability in case of cyberattacks, hardware failures, or accidental deletion.

Archiving and Compliance: Facilitating long-term data retention and adherence to regulatory requirements.

Disaster Recovery: Enabling businesses to quickly restore critical data and applications in the event of disruptions.

Ransomware Protection: Offering features like immutable backups to safeguard data against ransomware attacks.

Rubrik's cloud-native approach and focus on automation aim to streamline data security processes and reduce administrative burdens for IT teams.

Financial Performance

Despite its impressive growth, Rubrik is not yet profitable. In fiscal 2024, the company reported a net loss of $354.2 million, although its subscription annual recurring revenue (ARR) increased by 47% year-over-year. This strong revenue growth is a positive sign for growth investors, but the company's path to profitability remains uncertain.

Stock Performance and Valuation

Rubrik's stock (RBRK) is currently trading at $31.07 as of June 17, 2024. The stock has been on a downward trend, with both short and long-term moving averages issuing sell signals. However, some analysts maintain a positive outlook, with Barclays and Keybanc issuing "Overweight" ratings and price targets ranging from $40 to $48.

The company's current market capitalization is around $5.59 billion, with a price-to-sales (P/S) ratio of 8.1x and a negative price-to-earnings (P/E) ratio of -5.5x. While the negative P/E ratio is not surprising given Rubrik's current losses, the relatively high P/S ratio suggests that investors are pricing in significant future growth expectations.

Competitive Landscape:

Rubrik faces competition from established players in data protection and backup solutions like Veeam and Veritas, as well as cloud giants like AWS and Microsoft Azure with their own data security offerings.

Recent Developments and Future Outlook:

Product Innovation: Rubrik continues to enhance its platform with new features and functionality, including expanded ransomware protection and cloud-native security capabilities.

Partnerships: Strategic collaborations with major cloud providers like AWS and Microsoft Azure aim to broaden Rubrik's reach and market penetration.

Focus on Profitability: Transitioning towards profitability is a key objective for Rubrik in the coming years.

Here are some key factors for investors to consider:

Growth Potential: Can Rubrik maintain its impressive revenue growth trajectory and capture a significant share of the cloud data security market?

Competition: How will Rubrik fare against established players and the evolving offerings of cloud giants?

Path to Profitability: Will Rubrik be able to achieve profitability within a reasonable timeframe and demonstrate long-term financial sustainability?

Analyst Opinions on Rubrik (RBRK) Stock

While analyst opinions can vary, here's a general overview of the current sentiment:

Growth Potential: Many analysts acknowledge Rubrik's strong growth potential in the expanding cloud data security market.

Competition: Some analysts express concerns about the competitive landscape and the potential impact on Rubrik's market share.Valuation: Opinions on Rubrik's valuation can vary depending on the analyst and their overall market outlook.

Investing in Rubrik (RBRK): A Calculated Decision

Rubrik presents an attractive opportunity for investors seeking exposure to the high-growth cloud data security market. However, careful consideration of the company's financial performance, competitive landscape, and future outlook is crucial before making any investment decisions.

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Cohen

Economic

Commodity

A couple of years ago, British oil and gas supermajor BP Plc lamented that the North Sea crude price Dated Brent--the company’s most important pricing benchmark--was experiencing “regular dislocations.”Back then, a handful of deep-pocketed traders would sometimes hold as much as 40% of the world’s total crude supply for particular months, allowing them to manipulate the markets. Luckily for global markets, the inclusion of the United States' WTI Midland into the benchmark has made dated Brent more liquid and less susceptible to manipulations by vastly widening the pool of tradeable cargoes. The total supply of benchmark grades including Brent, Oseberg, Ekofisk, Forties, Troll and now WTI Midland has almost doubled from three years ago.

“Falling supply has been the biggest problem for Brent, so the whole idea of the inclusion of WTI Midland was to increase liquidity and prevent squeeze in the Brent benchmark, ” Adi Imsirovic, director of consultant Surrey Clean Energy and a veteran trader, told Bloomberg.

And, it’s all thanks to the U.S. shale revolution of the past 15 years that has made the country the leading oil producer and also transformed the country into a net exporter of oil. Last May, S&P Global's Platts added U.S. WTI Midland crude from the Texas shale fields to the global Dated Brent benchmark that accounts for roughly 80% of the world's crude. WTI Midland is similar in quality to the North Sea crude used in Dated Brent. To demonstrate its sheer dominance, consider that WTI Midland has set the price of Dated Brent more than half the time since its debut in the benchmark.

The inclusion of WTI Midland into Dated Brent serves another useful purpose: it prevents North Sea producers from putting their own cargoes into so-called chains. Chains, usually the cheapest grades, allow a company with forward contracts to sell actual barrels of oil to another firm, providing a link between paper and physical markets. Since May 2023, WTI Midland has dominated chains, turning the tables on Forties thanks to the U.S. grade being cheaper despite its superior quality.

"The market has really embraced Midland as a deliverable into the Dated Brent contract. Liquidity in the spot market has doubled with more companies involved," Dave Ernsberger, global head of pricing and market insight at S&P Global Platts has told Reuters

Surging U.S. Oil Exports

Judging by ongoing developments, U.S. crude is set to continue dominating global markets for years. According to data from ship tracker Kpler, WTI Midland exports hit a record at 2.94 million bpd in December, good for a 550,000 bpd Y/Y increase. About 1.71 million bpd, or more than half of the December volumes, was sent to Europe. Incidentally, surging U.S. crude exports have come at a time when North Sea output has been on a downward spiral. The supply of the five grades of North Sea crude that are included in Dated Brent fell to about 537,000 bpd in June from about 607,000 bpd a year earlier.

The inclusion of U.S. crude in dated Brent comes with clear benefits for U.S. producers, too, since they can sell WTI Midland many months forward into the Brent market, locking in future revenues and eliminating significant pricing risk. This has helped drive up activity in U.S. crude futures markets. Combined WTI Houston and WTI Midland average daily volumes of futures lots traded as differentials to WTI futures soared to 19,188 in May, nearly triple the figure before WTI Midland joined the benchmark.

"We are certainly seeing that reflected in hedging activity across the WTI complex,’’ said Peter Keavey, global head of energy at the CME.

That said, the short-term U.S. shale oil outlook appears murky. StanChart has reported that the horizontal rig count started to decline sharply in early 2023, and currently sits 20% below its post-pandemic peak after flatlining for the past six months. The analysts point out that whereas the completion of previously drilled wells and technical change provide an offset, a significant fall in activity, more often than not, leads to a lagged decline in growth. The analysts have predicted that U.S. crude output will clock in 300 kb/d lower than the pre-pandemic peak by the end of the year.

The EIA concurs with this view and has predicted that production will continue to fall in the second and third quarters of 2024 before rebounding in 2025.

Luckily for the oil bulls, most experts have predicted that global oil demand will continue to grow in the coming years. OPEC Secretariat has forecast demand growth of 2.247 mb/d in 2024, StanChart at 1.719 mb/d, the EIA’s forecast is 1.43 mb/d while Paris-based International Energy Agency (IEA) currently has the lowest 2024 demand growth forecast at 1.33 mb/d. For 2025, the OPEC Secretariat forecast is 1.847 mb/d; StanChart's at 1.424 mb/d while EIA 2025 demand growth forecast is 1.379 mb/d.

Source:Oilprice

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Samantha Luan

Economic

Commodity

Asian retail gold buyers are still keen to purchase more of the precious metal even as prices hover at elevated levels, with geopolitical and macroeconomic uncertainties driving their interest.

Attendees at a precious metals conference in Singapore this week were enthusiastic about bullion’s prospects, seeing demand across the region staying strong. That’s even after a record-setting rally that’s spurred a 16% jump since mid-February, taking prices to above $2,300 an ounce.

“The change in sentiment has brought obviously new higher prices — and that brought people back in,” Rhona O’Connell, head of market analysis at StoneX Financial Ltd., sad on the sidelines of the conference. But “it’s not just a reaction to price, it’s a reaction to what has driven the price in the first place, which is uncertainty and the concept of risk.”

Asian Consumer Demand for Gold Seen Staying Strong This Year_1

With more than 40 countries holding elections this year, political risk was a major theme at the Asia Pacific Precious Metals Conference. Anxiety over the worsening state of major economies, particularly China, and a slump in local currencies are also adding to gold’s appeal, even as it makes the metal more expensive for most buyers.

China remains the dominant retail market in Asia, and is challenging financial hubs like London and New York as the most important driver of prices. The metal has a long history in China as a savings tool, and the country is the top consumer and leading producer. That’s now being juiced by turmoil in the local property and stock markets.

The Chinese market is “probably the biggest driving force in price discovery right now,” said London Bullion Market Association Chief Executive Officer Ruth Crowell. “The growth in terms of demand for gold in Asia will continue.”

The LBMA is growing its presence in Asia, where it has seen huge growth in new members including banks, traders and good delivery refineries, Crowell said.

Elsewhere in Asia, there were some softening of demand in India between March and April, but appetite has returned as jewelers see higher sales during the festival season compared to the previous year, according to the World Gold Council.

In smaller markets like Vietnam, demand is strong with consumption in the first half expected to expand 10% year-on-year, according to Huynh Trung Khanh, vice chairman of the Vietnam Gold Traders Association.

In Japan, purchases are holding up even as the weakening yen makes bullion considerably more expensive for buyers there.

“We are seeing selling of course, but more buying, at that historical high level,” said Bruce Ikemizu, chief director at the Japanese Bullion Market Association. “This never happened in the past.”

Supply from scrap metal in the region has also tightened — which is unusual in this elevated price environment and is a “clear illustration that consumers don’t want to get rid of their gold,” said Nikos Kavalis, managing director at consultancy Metals Focus Ltd.

Over the longer-term, however, there’s reason to temper the bullishness as the geopolitical outlook may stabilize once this year’s massive election cycle is over.

“That takes one element of support out, unless the regimes that come in are enough to worry people,” StoneX’s O’Connell said.

Source:Bloomberg

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Owen Li

Energy

U.S. crude has dominated global benchmark oil pricing in the year since booming shale exports joined the mix of European crude used to calculate how much a barrel of the world's most traded commodity costs.

The shale revolution of the past 15 years has made the U.S. the world's top oil producer and also transformed the country from a top importer to a major exporter after Washington ended a 40-year ban on foreign shipments.

Last May, price reporting service S&P Global's Platts added U.S. WTI Midland crude from the Texas shale fields to the global Dated Brent benchmark, reflecting U.S. oil's rise in importance in global markets.

Previously, the benchmark had only included North Sea crude, whose supply has declined while U.S. crude exports to Europe surged as refiners sought alternatives to Russian imports, which the European Union banned in response to Moscow's invasion of Ukraine.

Platts uses the cheapest among WTI Midland and five grades of North Sea oil to set the benchmark, a price gauge for roughly 80% of the world's crude, according to the Intercontinental Exchange. Brent is viewed as a bellwether for the health of the oil market.

Since its inclusion, WTI Midland has set the price of Dated Brent more than half the time. WTI Midland is similar in quality to the North Sea crude used in Dated Brent. US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_1

US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_1

Increased Liquidity, Less Volatility

Volumes of WTI Midland crude headed across the Atlantic have climbed since its inclusion in the Dated Brent index.

WTI Midland exports hit a record at 2.94 million bpd in December, according to data from ship tracker Kpler, up by around 550,000 bpd on the year. About 1.71 million bpd, or more than half of the December volumes, were headed to Europe, noted Matt Smith, lead oil analyst at Kpler.

Surging U.S. crude exports have more than compensated for dwindling North Sea output. The supply of the five grades of North Sea crude that can be delivered into Dated Brent fell to about 537,000 bpd in June from about 607,000 bpd a year earlier, according to loading programs.

North Sea crude output has been falling for decades as producers have already pumped most recoverable oil from the fields.

That had left Dated Brent - and the related Brent futures market - vulnerable to relatively small North Sea supply problems.

"The market has really embraced Midland as a deliverable into the Dated Brent contract," said Dave Ernsberger, global head of pricing and market insight at S&P Global Platts. "Liquidity in the spot market has doubled with more companies involved." US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_2

US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_2

Higher liquidity has helped ease the volatility of the benchmark, making the market more stable despite conflict in the Middle East, attacks on shipping in the Red Sea and continuing disruption to oil trade caused by sanctions on Moscow.

Volatility as measured by the daily percentage change in Dated Brent prices fell to 0.05% in the one year since WTI Midland's inclusion last May. In the previous four years, it was a range of -0.4% to 0.6%.

US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_3

Since WTI Midland's inclusion a growing number of companies have participated in Dated Brent trading, said S&P Global Platts' Ernsberger.

A record 35 cargoes traded in the Platts Market on Close in April 2024, more than four times the number that traded the same month a year ago.

Among those who have traded Dated Brent since the change are Saudi Aramco, top Indian refiner Reliance, U.S. shale producer Occidental Petroleum and U.S. refiner Phillips 66, according to S&P Global and market participants.

"People who previously had no interest in Brent now see opportunity for their business," said Adi Imsirovic, a trading veteran who has published books and papers on Brent and runs consultancy Surrey Clean Energy.

The trading arm of Australian investment bank Macquarie Group has become a top supplier of WTI Midland to Asia after its inclusion in the contract, Imsirovic said.

"In the second quarter of 2024, Macquarie Commodities Trading sold its first WTI Midland cargoes into the Brent assessment mechanism. This new activity represents the continued growth of our physical crude platform," a Macquarie spokesperson said.

Aramco declined to comment, while Reliance, Occidental and Phillips 66 did not respond.

Hedging

U.S. producers can sell WTI Midland many months forward into the Brent market, locking in future revenues and eliminating some pricing risk, said Ilia Bouchouev, managing partner at Pentathlon Investments and former president of Koch Global Partners, a multinational conglomerate with exposure to refining and global commodities trading.

Trade in the related contracts used to hedge output and the cost of shipping has also risen, analysts said.

US Crude Dominates Dated Brent Benchmark as Shale Exports Boom_4

This has helped drive up activity in U.S. crude futures markets. Combined WTI Houston and WTI Midland average daily volumes of futures lots traded as differentials to WTI futures soared to 19,188 in May, nearly triple the 7,068 in May 2023.

"The overall global trading pie is getting larger", Bouchouev said, as traders explore new spread and arbitrage opportunities.

Investors with exposure to Brent contracts are now also exposed to U.S. crude prices.

"We are certainly seeing that reflected in hedging activity" across the WTI complex, said Peter Keavey, global head of energy at the CME.

Traders are using forward freight agreements (FFAs) to hedge the price risk for the cost of shipping the oil across the Atlantic.

Source: Reuters

Risk Warnings and Disclaimers

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Glendon

Economic

The EUR/USD currency pair has been stuck in a tight range recently, caught in the crossfire of conflicting monetary policy signals from the world's central banks. This article dives into the recent pronouncements from the Federal Reserve (Fed) and the European Central Bank (ECB) that are causing this currency market gridlock.

The Fed Flexes Its Hawkish Muscles

Recent comments from Federal Reserve officials have struck a surprisingly hawkish tone, dampening hopes of aggressive rate cuts in the latter half of 2024. While the Fed acknowledged signs of inflation cooling, some policymakers expressed concerns about the potential for a resurgence in price pressures. This hawkish tilt has bolstered the US dollar (USD) against a basket of currencies, including the euro (EUR).

Combating Inflation Remains a Priority: Despite recent declines in inflation readings, the Fed has emphasized its commitment to bringing inflation back down to its target of 2%. Several Fed officials have stated that they are prepared to adjust monetary policy as needed to achieve this goal.

Data Dependence: The Fed has indicated that its future rate decisions will be data-dependent. Upcoming inflation reports and economic data releases will be closely scrutinized to gauge the trajectory of inflation and determine the pace of future rate hikes.

Labor Market Strength: The robust US labor market presents a complex challenge for the Fed. While strong employment is a positive sign for the economy, it could also contribute to inflationary pressures if wage growth accelerates.

The ECB's Cautious Approach

In contrast to the Fed's hawkish lean, the European Central Bank (ECB) has signaled a more cautious approach to monetary policy. While acknowledging the recent slowdown in inflation, the ECB remains concerned about the ongoing war in Ukraine and its potential impact on energy prices and overall economic growth.

Wait-and-See Stance: The ECB has adopted a wait-and-see stance regarding potential rate cuts. They are likely to monitor the evolving economic situation, particularly the impact of the war in Ukraine, before committing to a specific course of action.

Focus on Underlying Inflation: The ECB is placing greater emphasis on underlying inflation, excluding volatile energy and food prices, to assess the true picture of inflation pressures.

Supporting Growth: The ECB is mindful of the potential risks of slowing economic growth in the Eurozone. They might prioritize supporting growth over aggressively tightening monetary policy in the near future.

EUR/USD Stuck in Neutral

The contrasting stances of the Fed and ECB have created a stalemate for the EUR/USD currency pair. The hawkish tilt from the Fed strengthens the dollar, while the ECB's dovish approach limits the euro's upside potential.

Market Uncertainty: The lack of a clear direction from central banks breeds uncertainty in the foreign exchange market. Investors are hesitant to take strong positions in either currency until the future trajectory of monetary policy becomes clearer.

Technical Factors: Technical analysis of the EUR/USD chart might indicate potential breakout levels in either direction, but these signals remain unreliable without a definitive shift in central bank policy.

Geopolitical Tensions: The ongoing war in Ukraine and its associated economic disruptions continue to weigh on the euro, further hindering its appreciation against the USD.

Looking Ahead: Key Events to Watch

The coming weeks and months will be crucial for the EUR/USD pair. Key events to watch include:

Upcoming Fed Meetings: The next Federal Open Market Committee (FOMC) meeting in July will be closely scrutinized for any changes in the Fed's monetary policy stance.

ECB Policy Announcements: The ECB's Governing Council meetings and any subsequent press conferences will be monitored for clues about their future rate cut plans.

Economic Data Releases: Inflation reports, employment data, and GDP figures from both the US and the Eurozone will be analyzed to assess the economic health and potential future actions by central banks.

Geopolitical Developments: The war in Ukraine and its impact on energy prices and global economic growth will continue to be a major factor influencing the EUR/USD exchange rate.

The EUR/USD Tug-of-War: A Complex Scenario

The battle between the Fed's hawkish whispers and the ECB's dovish stance has created a complex scenario for the EUR/USD currency pair. Investors and traders should carefully consider the interplay of these factors, monitor key economic data releases, and stay updated on geopolitical developments to navigate this evolving market environment.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Alex

Economic

As every connoisseur of the more excitable bits of the financial blogosphere can tell you, the dollar is on an unstoppable trajectory to disaster.

One recent post argued that the US has, like the Roman empire before it, weakened itself relative to other world powers. The dollar’s central role in the global financial system is in decline as “the people in charge never seem to miss an opportunity to dismantle capitalism brick by brick”.

That’s the argument. We’ve all heard it for more than two decades and we’ll hear it again, now with the added spice of dark geopolitical trends; the move in 2022 to punish Russia for its full-scale invasion of Ukraine by freezing its dollar reserves held abroad means lots of countries might now look to stash their rainy day funds in other currencies.

A global effort — co-ordinated or otherwise — to demote the dollar could happen. If executed at serious scale it would remove the exorbitant privilege from the US of issuing debt on its own terms safe in the knowledge that other national authorities will lap it up. This would change the game in markets and trade. But evidence to suggest it is already happening is limited at best.

The share of global central bank reserves held in dollars has declined in recent decades. Back in 2016, the currency made up more than 65 per cent of official reserves, according to data from the IMF. By the end of 2023, that had shrunk to 58.4 per cent. The amount held in Chinese renminbi at the start of 2016 was zero. Between the end of that year and 2023 it jumped 188 per cent. But while that sounds huge, it is still just a 2.3 per cent slice of the total.

However, a recent blog from the New York Fed argues that the apparent pullback away from the dollar is not down to a global cooling on the buck. Instead, the shift is attributable to a small number of countries, including Switzerland, where a long-running effort to hold down the franc just over a decade ago led to a huge accumulation of euros. “Indeed, increasing US dollar shares from 2015 to 2021 were a feature of 31 of the 55 countries for which there are estimates,” economists at the New York Fed wrote in late May. “The decline in the dollar preferences of a small group of countries — notably China, India, Russia, and Turkey — and the large increase in the quantity of reserves held by Switzerland explain most of the decline in the aggregate dollar share of reserves.”

Meanwhile, central banks globally have ramped up purchases of gold, in an apparent effort to avoid the risk of sanctions, since gold is not controlled by any national authority. Yet, as the New York Fed stresses, even after a rapid accumulation of gold in 2022 and 2023, the precious metal still accounts for a relatively modest 10 per cent of the global reserve total. Narratives about declining dollar shares and increasing roles for gold “inappropriately generalise the actions of a small group of countries”, it says.

In fairness to the dollar doomsters (who tend to overlap significantly with gold enthusiasts and the crypto curious), gold holdings do appear poised to rise further. A survey of reserve managers by the Official Monetary and Financial Institutions Forum think-tank said despite record high gold prices and a taming in global inflation, for which gold is often seen as a hedge, reserve managers are keen to build up holdings of the metal.

However, demand for the dollar remains extremely robust. This survey does not capture every country, but it does cover 73 central banks, with a combined stash of $5.4tn. Of them, OMFIF said a net 18 per cent expect to increase not decrease their allocation to the dollar, lured in by higher interest rates and a robust US economy. The euro is the next most popular currency on the wish list, suggesting reserve managers are keen to stick to the bigger, more liquid currencies.

Appetite for the renminbi, meanwhile, “has soured”, OMFIF’s researchers said, and 12 per cent of managers are looking to cut back on holdings in the Chinese currency. This is quite a change of heart. In 2021 and 2022, nearly one-third were looking to raise their renminbi holdings.

“This is partly due to relative pessimism on the near-term economic outlook in China, but the vast majority also mentioned market transparency and geopolitics as deterrents . . . ” the think-tank’s report stated.

Nothing lasts for ever. It is not impossible to imagine, in the current political climate, a deterioration in US institutional resilience that ends up posing a serious threat to the dollar’s long-term standing. But it felt premature to call time on the dollar’s primacy in the global financial system two decades ago and it still feels premature now.

Source:Financial Times

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Joe Biden Vows US Will Support Ukraine ‘Until They Prevail In This War’

Source:Financial Times

Rubrik (RBRK) Stock: Cloud Data Security Leader or Overvalued Play?

Rubrik's Value Proposition: Simplifying Cloud Data Security

Financial Performance

Stock Performance and Valuation

Competitive Landscape:

Recent Developments and Future Outlook:

Analyst Opinions on Rubrik (RBRK) Stock

Investing in Rubrik (RBRK): A Calculated Decision

U.S. Crude Is Dominating Global Oil Markets

Surging U.S. Oil Exports

Source:Oilprice

Asian Consumer Demand for Gold Seen Staying Strong This Year

Source:Bloomberg

US Crude Dominates Dated Brent Benchmark as Shale Exports Boom

Increased Liquidity, Less Volatility

Hedging

Source: Reuters

EUR/USD Stalemate: Fed's Hawkish Shift vs. ECB's Rate Cut Pause

The Fed Flexes Its Hawkish Muscles

The ECB's Cautious Approach

EUR/USD Stuck in Neutral

Looking Ahead: Key Events to Watch

The EUR/USD Tug-of-War: A Complex Scenario

Dollar Doomsters Have Got It All Wrong

Source:Financial Times

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