The week opened up with ears open for a Sunday (US time) speech from Federal Reserve Chair Powell. It was a commencement speech at a law school, which Powell gave remotely via video as he contracted Covid late last week. Powell did not comment on the economy or policy.

Data flow was barely existent.

We did, however, have the Loan Prime Rate (LPR) settings from the People’s Bank of China. LPRs play a vital role in determining interest rates for loans and mortgages in China. The PBoC left both the 1- and 5-year unchanged, as was widely expected, at 3.45% and 3.95% respectively. The last time the 1-year was cut was back in August last year while the 5-year was cut in February this year. Expectations are that the People's Bank of China is still likely to ease monetary policy further. One compelling reason is that more liquidity will be needed for China's banks to purchase government bonds, including the issuance of ultralong special Treasury bonds that started last Friday - these bonds are raising cash for economy-building purposes (stimulus).

On the news front, a helicopter carrying Iranian president Ebrahim Raisi and Iranian Minister of Foreign Affairs Hossein Amir-Abdollahian crashed in a mountainous area of the East Azerbaijan region of Iran, northwest of Tehran and bordering Azerbaijan. It took many hours for the downed chopper to be found and when it was it was just smashed and burned wreckage. No one aboard survived.

This has implications, potentially, for the oil price. While there are no suggestions, yet at least, of foul play, if these surface and perhaps the blame laid on the US or Israel it’d be an escalation of an already tense Middle East situation. Which would, at the margin, be supportive of oil.

In other news the Saudi King, Salman bin Abdulaziz, will undergo a treatment programme at Al Salam Palace in Jeddah for a lung inflammation. Saudi Arabia's Crown Prince Mohammed bin Salman was due in Japan from May 20 to May 23. He has postponed the trip. He was to meet with Prime Minister Fumio Kishida.

The oil price nudged higher today with both these items out of the Middle East.

Gold, silver and copper jumped. Gold to a record high.

USD/JPY rose towards 156.00 and has once again pulled back from there. Major FX was mainly bound in small ranges only.

Brent oil, tiny opening gap to begin the week:

brent oil iran helicopter 20 May 2024  wrap 2