The Sellside Reacts To The First Rate Hike In Years: "It's Calm On The Floor"

While Yellen still speaks in her historic "first rate hike in years" press conference, the sellside has shares its kneejerk reaction to the Fed's announcement, and as Citi notes, "It’s calm on the floor considering the first rate hike in years. More attention on WTI crude, which remains 4% lower to 35.80 after DOE inventory build."

Crude Crashes To $35 Handle After Biggest December Inventory Build In 22 Years

Following last night's surprising 2.3mm barrel inventory build, reported by API, DOE reports a massive 4.8mm build against expectations of a 1.5mm barrel draw and way above the highest estimate of a 2.6mm draw. This is the biggest build in 2 months at a seasonally 'weak' time of year (and biggest December build since 1993). Crude ramped overnight to regain the losses from the API dump, but dropped back to lows (under $37) before the DOE data, then crashed below $36. Furthermore, production was up in the lower 48.


Congress To Lift Four Decade Oil Export Ban: Will It Impact Crude Prices?

“The deal to lift the crude ban is a significant change in U.S. policy, but in terms of the near-term impact on prices, we expect that to be blotchy and sentiment driven. All that you’re doing is transferring the glut from the U.S., where most of the storage capacity is, to elsewhere in the world.”

Frontrunning: December 16

  • Fed Poised to Mark the End of an Era (Hilsenrath)
  • Fed opens meeting to put an end to crisis era policy (Reuters)
  • Fed's Historic Liftoff and Everything After: Decision Day Guide (BBG)
  • Emerging Markets Gird for Fed Rate Increase (WSJ)
  • What 7 Years at Zero Rates Have Looked Like (BBG)
  • 5 Things to Watch at the Fed Meeting (WSJ)

Global Stocks, US Futures Greet Historic Fed Day With Euphoria

The day has come when the boxed-in Fed has no choice: with the vast majority of the market expecting a rate hike, Yellen has to deliver or suffer a crushing confidence blow like no other. And deliver she will, with expectations that said hike will be "as dovish as possible." For now however, the market is desperate to convince itself that just as more easing and more QE were bullish for the market, so rate hikes are just as bullish. Recall from late 2013: "tapering is not tightening," then the 2015 version of this refrain is "tightening is not tightening."

WTI Slumps Under $37 After API Reports Unexpected, Large Inventory Build

Following last week's huge draw, total crude inventories were expected to drop 1 million barrels this week driven by expectations that refinery utilization rose last week. When API reported a hugely surprising 2.3 million barrel build, crude prices, which had drifted off highs after NYMEX close, dropped further as disappointment set in, back under $37.

Copper's Dumping As Crude's Pumping

Dr. Copper and Captain Crude are in significant disagreement over the state of the world... or it is just algos gone wild once again?

Russia Sees No Oil Price Recovery In The Coming 7 Years

“In our estimates, one should hardly expect any serious growth of the oil price above $50," Oreshkin told a breakfast forum hosted by Russian newspaper Vedomosti on Friday. “The oil industry is changing structurally and it may happen that... the global economy will not need that much oil."

Frontrunning: December 15

  • Global stocks rise but oil, Fed keep investors nervous (Reuters)
  • Janet Yellen: An orthodox economist for unorthodox times (Reuters)
  • House Democrats Said to Be Open to Lifting Oil Export Ban (BBG)
  • Don't Count on an Oil Rally If U.S. Crude Export Ban Is Lifted (BBG)
  • Germany welcomes 34-state Islamic military alliance against terrorism (Reuters)
  • U.S. soldier Bergdahl may face life sentence in court-martial over desertion (Reuters)

Futures Surge, Oil Rebounds As Fed Starts Historic Two-Day "Rate Hike" Meeting

The start of the Fed's most eagerly awaited two-day policy meeting in years has finally arrived with the market expecting Yellen to announce the first 25 bps rate hike in 9 years tomorrow with nearly 80% probability, and so far US equity futures are enjoying a last minute relief rally, while emerging market stocks rose for the first day in ten after the longest losing run since June. Europe's Stoxx 600 Index has also rebounded from a five-day losing streak, the worst in over four months.