US: Treasury Sec Bessent On Rates, USD As Reserve Currency, Tariffs

After rising strongly last week, oil prices were moderately lower on Monday driven by technical selling but held onto most of the gains. The relative strength index was flashing overbought after crude rose for five consecutive sessions. The USD index fell 0.6%.

• WTI is down 0.7% to $73.42/bbl following a high of $74.99, above initial resistance at $74.39, and then a low of $73.20. Key short-term resistance is at $76.41, while initial support is $71.79, January 2 low.
• Brent fell 0.4% to $76.17/bbl after rising to $77.50, above resistance at $76.89, and then falling to $75.94. If the uptrend resumes, then attention will refocus on key resistance at $79.50. Initial support is at $74.72.
• The US is planning more sanctions on tankers carrying Russian oil. The targeting of its shadow fleet has resulted in increased demand for Middle Eastern crude and subsequent pickup in prices. Saudi increased prices for Asian customers following Oman and Dubai.
• The latest CFTC data shows that hedge fund longs on WTI rose 41% over the last three weeks, while shorts fell 33% resulting in the largest net long position since August, according to Bloomberg.
• President Biden announced a ban on new offshore oil and gas projects covering around 625mn acres of coast. The area includes the Atlantic, Pacific and eastern Gulf of Mexico. President-elect Trump has said he will “unban” these areas but to do so will require an act of Congress.
• In Canada, Alberta’s government has said that it will guarantee barrels of crude to encourage new pipelines to be built to achieve its goal of doubling its oil and gas output. 

ACGBs (YM flat & XM -0.5) are slightly weaker after US tsys finished with a bear-steepener. US yields finished flat to 4bps higher across benchmarks. 

• US tsys and Wall Street were in rally mode into the open after a Washington Post report suggested President-elect Trump would go softer on tariff plans. But he quickly denied the report and the markets turned choppy in response.
• Cash ACGBs are flat with the AU-US 10-year yield differential at -16bps.
• Swap rates are flat.
• The bills strip is flat to -3 across contracts.
• RBA-dated OIS pricing is flat to 2bps firmer, with late 2025 leading. A 25bp rate cut is more than fully priced by April (109%), with a February cut at a 56% chance.
• Today, the local calendar will see Building Approvals ahead of November CPI data tomorrow.
• November CPI is likely to be watched closely ahead of Q4 data on January 29. It will also include more updates for services components than the October release. Bloomberg consensus is forecasting the headline to pick up 0.1pp to 2.2%. The trimmed mean was 3.5% the previous month.
• The local calendar also shows retail sales and trade balances on Thursday.
• AOFM Bond issuance is expected to resume in the week beginning 13 January 2025.

The Census Bureau confirmed today: "Due to the executive order closing the federal government on January 9, 2025, the Monthly Wholesale Trade Report will now be released on Wednesday, January 8 at 10:00 a.m."

• That's in line with shifts forward in Treasury auctions and jobless claims data, and leaves the Challenger job cuts report (a private sector release, not from government) as the only US data still scheduled to be released Thursday.