The Weekly Strategy Report (July 16, 2018) - J.P. Morgan Asset Management
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The Weekly Strategy Report (July 16, 2018)

In brief
  • Oil market dynamics have diverged between West Texas Intermediate, where the front end of the curve has been in extreme backwardation, and Brent crude, where last week’s sell-off flattened the futures curve. This suggests tighter markets in the U.S. relative to the rest of the world, but likely also reflects a number of technical market phenomena.
  • The acceleration phase in oil prices appears to be over for now, given Saudi Arabian and Russian commitment to boost supply (as well as negative trade rhetoric), but Brent prices look supported in their new range somewhere around USD 75 per barrel.
  • Our portfolios overweight the energy-heavy Canadian equity market, part of a broader stock-bond overweight. We have trimmed our exposure to emerging market equities and debt, both of which are highly levered to a U.S. dollar that may benefit if global trade deteriorates.
    EXHIBIT 1: West Texas Intermediate 1month-6month spreads
    EXHIBIT 1: West Texas Intermediate 1month-6month spreads

    Source: Bloomberg, International Energy Agency, Morgan Stanley, J.P. Morgan Asset Management; data as of July 2018.

Weekly Strategy Report (July 16, 2018)

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Please be aware that this material is for information purposes only. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.

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