Despite the absence of a lasting resolution to the conflict in the Middle East, oil continues to trade at around USD 90 per barrel. Markets remain relatively calm, supported by the industry’s ability to adapt. Logistical constraints are being partly circumvented through transshipment operations and the development of new export routes via the Red Sea and Turkey. Although global oil inventories have begun to decline again, the drawdown remains limited and is not causing significant concern.
Conditions are more strained in refined products. Gasoline and diesel inventories are falling rapidly, while prices remain close to the highs reached in the spring. Attacks on several Russian refineries have reduced global production capacity, and other market participants are struggling to offset the shortfall.
Over the longer term, the rebuilding of oil inventories should provide support to the market. However, the United States is seeking to limit the impact, notably through its rapprochement with Venezuela, while divisions within OPEC could result in more abundant supply. We continue to monitor developments in these factors.
The Jackson Hole symposium ultimately proved to be a pivotal moment for the US Federal Reserve and its new Chair, Kevin Warsh. Following an early tenure marked by occasionally hesitant communication and uncertainty surrounding the future path of monetary policy, his speech helped restore some of the Fed’s credibility in its fight against inflation.
Kevin Warsh firmly reiterated that the 2% inflation objective, as measured by the PCE index, remained a “firm and fixed” target. He also emphasised that underlying inflation had not made sufficient progress towards this objective and that financial conditions could not be considered restrictive. Without explicitly committing to an interest-rate increase, he therefore prepared markets for potentially tighter monetary policy in the coming months.
This more orthodox communication comes as the US Treasury prepares to step up its buybacks of long-term debt. The operation, which is intended in particular to reduce the amount of available duration to the market, should help alleviate upward pressure on long-term yields. Kevin Warsh’s remarks further reinforce this effect by restoring confidence in the Federal Reserve’s ability to keep inflation expectations firmly anchored.
The market’s response has been particularly encouraging in this respect: while two-year yields rose, the 30-year yield remained stable, resulting in a flattening of the yield curve rather than a renewed broad-based increase in rates.
We believe this development could mark a turning point for the US bond market. The combination of a more credible Federal Reserve in its fight against inflation and a Treasury intervening directly at the long end of the curve should gradually help establish a ceiling for long-term yields. Against this backdrop, we maintain a constructive stance on high-quality US bonds and continue to favour longer maturities, which offer attractive appreciation potential should the decline in yields be confirmed.
This week’s figure: 70%
It is the revenue growth forecast by Nvidia’s management for fiscal year 2028. Demand for the development of AI-related technologies remains exceptionally strong. Investors had anticipated sales growth of approximately 45%. This confidence in the Group’s future growth prospects is therefore likely to continue fuelling enthusiasm for the technology sector.