Opening Statement from the April 2019 CCPM Forecaster
Originally published on April 1, 2019 (pre-market release)
The severe sell off in the stocks during the last quarter of 2018 resulted in annual losses for all equities markets. And although the stock and bond markets have largely recovered from these losses, the commodities market is still lingering as the trend of weakened global growth has become a more prominent concern.
As we predicted in January, the ECB has recently stated that it is not likely to raise short-term interest rates in 2019. We do believe the ECB could raise rates in December if Washington strikes a timely trade deal with China. But this would require a significant boost in Eurozone economic activity. Overall, we do not believe the ECB should raise rates any time in 2019 other than as a symbolic gesture.
Crude oil pricing has remained range bound as forecast. However, pricing could exceed our upper range over the short to intermediate term as a result of OPEC’s reactions to waning demand. At the same time, one or more geopolitical issues could lead to significant departure of crude pricing according to normal supply and demand dynamics.
Overall, we believe oil pricing is likely to continue to rise beyond our upper limits despite macroeconomic dynamics that would otherwise indicate a price decline. However, we do not expect these higher price levels to hold unless OPEC persists in its refusal to boost output. Given the political pressure faced by Saudi Arabia, we expect OPEC to eventually give in to recent demands made by Trump to boost output.
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