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Central banks to be indirectly influenced by falling oil prices – DB

FXStreet (Barcelona) - Research Analysts at Deutsche Bank view the central banks to likely to be heavily influenced by the inflation outlook and on that note the continued fall in energy prices is likely to be important even if it doesn't directly impact the core numbers.

Key Quotes

“As mentioned above Brent broke below the US$80 mark yesterday and it’s held those levels overnight in Asia, trading at $79.96/bbl as we write. Sentiment around oil continues to wane with Bloomberg suggesting that OPEC will refrain from removing a surplus triggered by booming US shale output.”

“On the topic of oil prices, our US colleague Oleg Melentyev has put together some work on the US high yield energy sector with regards to a potential ‘tipping point’ for the cohort following a further slump in the oil price. The basic premise of the note is that the US HY energy sector sits at the higher end of the credit quality scale and for this reason enables companies to absorb oil price shocks.”

“However a WTI price of $60/bbl could likely be enough to push the whole sector into distress. It’s certainly worth a read as the one thing that's been stable in this summer/autumn HY sell-off has been fundamentals.”

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