Report: Commodities revenue down 1% in H1 for top global banks | Investors flock to precious metals as safe haven | CME Group plans Shanghai gold futures launch next month
September 12, 2019
Commodities Insight SmartBrief
Regulatory insight and top news for commodities markets
This Week in Commodities
Report: Commodities revenue down 1% in H1 for top global banks
The 12 largest global investment banks saw their commodities-related revenue drop by 1% to $2 billion during the first half of 2019, according to a report by Coalition. The consultancy noted that while oil revenues increased significantly, "power and gas declined due to fewer large structured deals."
Reuters (9/5) 
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Investors flock to precious metals as safe haven
A drop in global bond yields has investors moving into precious metals at the highest level in years as they search for a haven from market turmoil pressures brought on by the US-China trade war. "Traders that had been out of the metals market are coming backā€¦ and there's been a lot of buying from new accounts," says RJO Futures senior commodities broker Bob Haberkorn.
The Wall Street Journal (tiered subscription model) (9/5) 
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CME Group plans Shanghai gold futures launch next month
CME Group plans to launch two new financially-settled Shanghai gold futures contracts to be denominated in US dollars and renminbi on Oct. 14. Both contracts will be listed on COMEX, pending regulatory approvals.
Reuters (9/11),  Kitco (9/11) 
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Analysis: Circumstances right for record gold prices
Citigroup analysts say gold could be on track to break the $2,000 per ounce barrier as the US cuts interest rates and growth slows. The 2020 US election could also contribute to a boost in prices for the precious metal.
Financial Times (subscription required) (9/10) 
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EIA revises US oil, gas output projections for 2019, 2020
US oil production will grow at a rate of 1.25 million bpd and hit a fresh high of 12.24 million bpd this year, while 2020 output will climb by 990,000 bpd to 13.23 million bpd, according to the latest Energy Information Administration projections. Meanwhile, domestic dry natural gas production will soar to a record of 91.39 billion cubic feet per day this year and reach 93.19 Bcf/d in 2020, the EIA said.
Reuters (9/10),  Reuters (9/10) 
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Bearish bets on natural gas futures backfire
A move by hedge funds in August to make the biggest bets against the price of natural gas in over a decade has ended badly, as natural gas futures for October delivery have increased by 25% from a three-year low reached on Aug. 5.
The Wall Street Journal (tiered subscription model) (9/10) 
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China's pork shortfall means more business for Brazil, Europe
African swine fever has meant a shortage in domestic pork for China and producers in Europe and Brazil are stepping in to shore up the supply. China has lost a third of its pig stock to the virus.
Financial Times (subscription required) (9/11) 
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CME Group Insights
Trade war hits equities
Equities have suffered in the US-China trade war due to supply chain disruptions that cut into margins. CME Group Chief Economist Blu Putnam says companies are protecting market their market, even if it cuts into their profits.
CME Group (9/10) 
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COT report shows big bet on rise of gold
The Commodity Futures Trading Commission's Commitment of Traders report is a key tool for traders with a wide range of approaches as to how to use this information. "We have noticed the large speculator group in the COT report have amassed a near-record net long position in gold futures traded on the COMEX division of the CME Group," writes Carley Garner.
OpenMarkets (9/6) 
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Policy Update
China exempts lubricant oils, keeps tariff pressure on US farmers
China has announced exclusions to its 25% tariff on certain US goods, including taking lubricant oil and pharmaceuticals off the list. The exemptions cover $1.65 billion in products, but tariffs are expected to remain in place on most US farm products.
Bloomberg (tiered subscription model) (9/11) 
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Trump delays increase in tariff on some Chinese imports
US President Donald Trump announced a delay in an increase on tariffs set to go into place on $250 billion of Chinese imports. Trump said the two-week delay is a "gesture of good will."
CBS News (9/12) 
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Falih out at Saudi energy minister
The Saudi government has removed energy minister Khalid al-Falih from his position, marking a fall from grace for Falih as Crown Prince Mohammed bin Salman moves to speed up Aramco's IPO. Falih was well respected in the oil industry.
Financial Times (subscription required) (9/9) 
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Treasury: All cryptocurrencies must meet US rules
Though Facebook's libra and other cryptocurrencies might be based outside the US, they must comply with US rules that combat money laundering, says Sigal Mandelker, undersecretary of terrorism and financial intelligence at the Treasury Department. "Whether it's bitcoin, ethereum, libra, our message is the same to all of these companies: Anti-money laundering and combating the financing of terrorism has to be built into your design from the get-go," Mandelker says.
Reuters (9/11),  CoinDesk (UK) (9/10),  The Wall Street Journal (tiered subscription model) (9/10) 
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Volcker tells Powell revision would weaken Volcker rule
Former Federal Reserve Chairman Paul Volcker has told Chairman Jerome Powell a proposal that would ease restrictions on banks' stakes in private equity funds and hedge funds and that would narrow banks' trading limits would weaken the Volcker rule's core concepts. "The new rule amplifies risk in the financial system, increases moral hazard and erodes protections against conflicts of interest that were so glaringly on display during the last crisis," Volcker says in a letter to Powell.
Bloomberg (tiered subscription model) (9/10) 
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More Resources
What separates us from the animals, what separates us from the chaos, is our ability to mourn people we've never met.
David Levithan,
American author
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