US MARKET WRAP – Politics Continues To Eclipse Economics

Risk aversion continued to be the major theme early this week amid US political uncertainty, North Korea and more coverage/worry surrounding the US debt ceiling giving little incentive to move into risk plays.

US Treasury Secretary Mnuchin and Senate majority leader McConnell spoke on tax reform and the debt ceiling, but the pair failed to offer anything new.

The US political backdrop weighed on the greenback, with the USD closing lower against the majors, with the EUR outperforming on a news-light day.

US stocks ended the day mixed, with the Nasdaq underperforming, after the Dow and S&P 500 reversed their early losses. The S&P 500 closed up 0.11% at 2,428.32, the NASDAQ closed down 0.08% at 5,786.54 and the Dow closed up 0.13% at 21,703.35.

US treasury trade was relatively listless, with bonds operating in a narrow range and remaining bid throughout the US session. Sep’17 10y T-note futures settled at 126.27, up 3 ticks.

Crude ended the day lower with WTI crude futures settling at USD 47.37/bbl, down USD 1.14. The main catalyst for the move was a sources piece which suggested that Shell will restore its Deer Park refinery to normal operations by the middle of the week. The story dragged crude lower, with WTI not finding any real support until USD 47.00 where a base was formed. This was despite a host of supportive stories, including a sources piece which suggested that the OPEC/non-OPEC JTC sees July production deal compliance at 94% (up from June’s 92%), as well Libya’s NOC declaring a force majeure on its largest oilfield over the weekend, plans for lower Nigerian crude loadings in October, Genscape inventory data showing a notable draw at Cushing, and Kuwait’s oil minister suggesting that US crude stocks are falling at a faster rate than expected.

21 Aug 2017 - 21:00- EnergyResearch Sheet- Source: RANsquawk