Oil: Headed northwards – Danske Bank
Analysts at Danske Bank note that the oil (futures up 2% on the day to USD50.5/bbl) has continued its gradual climb and is now up 10% YTD and they are forecasting prices to surge towards USD 65/bbl short term as OPEC+ cuts come into effect.
“Oil has been an important driver of US interest rates and break-evens recently. 5Y treasury yields are up another 7bp since yesterday, making the short end of the US yield curve ever less inverted as it continues to flatten.”
“The market-implied probability of a Fed hike in March increased from 0% to 8%. 10Y US break-evens are up 13bp over the past three days following the climb in oil, significantly outperforming nominal yields.”