AMERICAS OIL: Pemex to Return Suspended Rigs by H2 2025: Platts

This is a repost of a note sent yesterday

Markets remain highly sensitive to US President Trump’s communications since his inauguration last Monday, particularly with respect to trade policy. Colombia has been the most recent country targeted by tariff threats, though Trump’s primary focus has been on Mexico, Canada, the EU and China.

• The President has threatened a 25% universal tariff rate on imports from Canada and Mexico from February 1 (Saturday), alongside a 10% tariff on goods from China.
• While not targeted with specific actions yet, the EU has also been subject to Trump jawboning.
• Using IMF data on goods trade, we define a country’s US trade intensity as the proportion of US imports and exports relative to total imports and exports, expressed as a %.
• The charts below highlight the importance of the US to Mexican and Canadian goods trade.
• Mexico ran a 12.3% (of domestic GDP) trade surplus with the US in 2023, corresponding to USD219bln, while Mexico’s US trade intensity was 62%.
• In Canada, the USD149bln trade surplus with the US represented 7% of GDP, while US trade intensity was 63%.
• China and the EU have a smaller US trade intensity and run smaller goods trade surpluses as a % of GDP. However, the nominal trade surplus with the US remained sizeable at USD340bln for China and USD168bln for the EU.
• Canada's sensitivity to trade policy developments will likely be in focus at today's BOC decision. See here for MNI’s comprehensive preview of that event.

OI data indicates a mix of net short setting and long cover during Tuesday’s downtick in SOFR futures.

• There was a fairly balanced round of net long setting and short cover when assessing the strip-wide adjustments.
• Net short setting was most concentrated in the whites and blues, while net long cover was seen in the reds.
• Contracts were nowhere near unwinding Monday’s dovish move that followed DeepSeek’s AI advances.

Massive for UK Bonds, decent for Europe, and small for the US.

Bloomberg Bonds projected:

• US Tsys: +0.07yr (small, average).
• EU Govies: +0.10yr (decent).
• UK Govies: +0.23yr (HUGE).

MS Bonds:

• US Tsys: +0.05yr (small).
• EU Govies: +0.07yr (small, average).
• UK Govies: +0.17yr (LARGE).

Citi Bonds:

• EU Govies: +0.10yr (decent).
• UK Govies: +0.19yr (HUGE).

Barclays FX:

• Their rebalancing model indicates a moderate dollar selling signal against most majors and the signal for Cable is borderline strong.

Credit Agricole FX:

• They see mild USD selling across the board with the strongest sell signal vs the Yen. Their corporate flow model points to EUR selling also.

Deutsche FX:

• They see mild USD buying (vs EUR and SEK, NOK), while seasonality points toward broad USD selling.