Japan's FX Interventions: Temporary Fixes Mask Denial
There's 2 problems with Japan's FX interventions. First, they're only a temporary fix and never reverse the falling trend of the Yen. Second, they signal a gov't that keeps repeating a failed strategy instead of doing what's right, i.e. they signal denial. https://t.co/N24ndkG8bl https://t.co/JEu3glNZcU
Blockade of Iran Mirrors Russia’s Shadow Fleet Failure
The alternative to the blockade is what we did on Russia and look where that got us. Russia built a shadow fleet, is exporting lots of oil and keeps waging terrible war in Ukraine. The blockade of Iran is recognition...
Iran Blockade Prediction Matches Current Brent Surge; Little Upside Left
In this post from back in March, I calculated that an Iran blockade would cause Brent to rise 80% from pre-war levels. That's exactly where we are now based on the July Brent future. The case for oil prices to...
July Oil Futures Hit $108, Pricing Gulf Shortfall
The June Brent future (black) expires today, so a better gauge for oil prices is the July future (pink) that is $108 and up 80% since the start of the year. By any stretch of the imagination, this fully prices...
Yield Caps Hide Fiscal Risk, Depreciate the Yen
The Yen is tumbling. That's happening because the BoJ caps Japanese long-term yields at artificially low levels via JGB purchases. These yield caps prevent the fiscal risk premium from showing up in the bond market, so instead it shows up...
Physical‑paper Oil Price Gap Narrows to Six‑week Low
Lots of ink was spilled in recent weeks on decoupling between physical and paper oil prices (lhs). But here we are: the gap (rhs) is the narrowest it's been in 6 weeks. This after all the talk this gap could...
Yen's Slide Reflects Debt, Not Policy, as BoJ Caps Yields
Japan's Yen is the weakest in many years, even though the BoJ this week was hawkish and signaled a hike for the next meeting. Debasement of the Yen isn't a currency story. It's a debt story. As long as the...
Strait of Hormuz Drives Oil Surge Over Russia
Brent is now up 65% from pre-war (blue) vs 16% on a similar timescale in 2022 after Russia invaded Ukraine (black). The Strait of Hormuz is 3x as important as Russia for global oil markets. Markets are pricing that. Even...
US Blockade Pressures Iran as Its Oil Reserves Dwindle
The purpose of the US blockade is to put pressure on the regime and bring it back to the negotiating table. The narrative on Iran is already shifting. We’re going from “Iran has the upper hand” to “Iran is running...
EU Should Fix Russia Transshipments, Not Confront US
It's understandable the EU doesn't like getting talked down to by the US. But the solution to that isn't picking fights with the US. It's being honest about what isn't working and fixing that. The flood of transshipments to Russia...
US Investor Flight Temporarily Fuels Dollar, Soon to Fade
Whenever there are bad shocks, US investors bring money back home, which temporarily boosts the Dollar. That happened in 2008, 2020, 2025 and is what's going on now. Current Dollar strength is temporary and will fade as soon as there's...
Western Media Double‑standard: Iran Praised, Russia Condemned
After Russia's invasion of Ukraine, Putin got portrayed in Western media as running circles around the West. Same now for Iran. Western journalists spend tons of time criticizing the US blockade and talking up Iran. Not true for Russia. Not...
Europe's Near‑Zero Growth Heightens Recession Risk Amid Energy Shock
Recession risk in Europe is rising. The 2022 energy shock after Russia's invasion of Ukraine was bigger, but growth into that shock was higher as we were coming off the COVID rebound. Now growth is near zero and this shock...
Blockade Won’t Push Oil Past $150, Here’s Why
I did a live stream yesterday covering the ins and outs of the blockade and closure of the Strait. Single biggest question - as long as the blockade lasts - is how high oil prices go from here. I go...
Dated Brent Falls to Futures, Disproving Manipulation Myth
I hear endless stories that the futures market is manipulated. It's an urban legend. Easiest way to debunk this is to look at Dated Brent versus futures. The gap has closed significantly due to Dated Brent falling towards futures not...
Oil Won’t Hit $150–200; US Iran Blockade Proving Effective
Here's my discussion with @paulkrugman from March 19 where I argued oil prices won't go to $150 or $200 and recommended the US blockade Iran. It's as relevant to global oil markets today as it was back then. The blockade...
Brent Surges 60%, Fuel Shortages Hit Global Markets
This week will bring a drumbeat of physical shortage stories. Here's the deal. Brent is up 60% from before the war. That's more than 3x the rise after Russia's invasion of Ukraine. The SoH is 3x Russia's oil exports to...
Dollar's Surge Temporary; Peace Deal Could Cut 3%
The Dollar has risen sharply due to safe haven inflows, but as soon as we get a peace agreement, those flows will reverse. My best guess is that the Dollar will fall immediately by 3 percent on such an agreement....
Global Growth Stalls; France Flatlines at 0.5%
Global growth is very weak. The yellow column shows what growth in 2026 would be if GDP is flat after Q4 '25. This is what people call "carryover." For France, that's 0.5% versus my forecast of 0.7% in gray. France...
UK and Japan Face Renewed Supply Chain Strains, US Resilient
In the wake of COVID, supply chains got extremely stretched with long delivery delays (black lines). That's now happening again in the UK (bottom left) and Japan (bottom right), but less so in the US (top left), which is more...
BoE's Rapid Bond Unwind Fuels UK's Higher Yields
The UK isn't the fiscal basket case it's made out to be. During the LDI crisis in 2022, the Bank of England kicked asset managers to the curb. It's also unwound its gov't bond holdings way faster than other central...
Oil Shortage Already Priced In, No $200 Brent
It's not obvious physical shortage of oil now should drive prices higher. Markets are forward-looking and this shortage was predictable. So the 60% rise in Brent from before the war prices much of this. Maybe we go a bit higher,...
Oil Prices Already Reflect War Shortfalls, Further Rises Unlikely
I covered 3 topics on this morning's live stream: (i) the 60% rise from before the war means oil already prices the physical shortfalls unfolding now, so prices shouldn't rise much further; (ii) global supply chain disruptions; (iii) rising global...
Phishing Lockout Resolved Quickly Thanks to Community Support
Two days after falling prey to a phishing attack and getting locked out of my account, I'm back in. Sincere thanks to @X for resolving this so quickly. So grateful also to @lisaabramowicz1, @Brad_Setser, @AnnaEconomist, @baselinescene, @GagnonMacro and many others...
UK Yields Rise as BoE Shuns Gilt Buying, Unlike ECB
In Oct. '22, the Bank of England refused to keep buying gilts, in contrast the ECB that capitulated to Italy and Spain, capping their yields that summer. Markets now price yield caps for Italy and Spain, but not for the...
Brent Futures Gap Collapsed, Market Silence Prevails
The thing about markets is that stuff only gets talked about when it's apocalyptic. The gap between Dated Brent and futures has collapsed, so no one talks about it anymore. Sign up as a paying subscriber for my daily posts...
US Cuts Iran Oil, Delivering Sharp Economic Pain
The best way to deal with a belligerent oil exporter is to cut off its oil exports. The West dropped the ball on Russia in 2022, but the US is now doing this right with Iran. Iran faces severe economic...
Yield Caps Shift Fiscal Strain to Yen, Raise Rates
There's no free lunch in macro. The Yen keeps falling because Japan uses the BoJ to cap yields. That doesn't make fiscal strain go away. It just transfers it from the bond market to the Yen. The way out is...
UK's Yield Strategy Beats Japan's Yield Caps
The UK gets a lot of guff for being a fiscal basket case due to its high yields, but that's not right. The counter-example is Japan, which caps yields using the BoJ (lhs), sending the Yen into a depreciation spiral....
U.S. Blockade Sparks Iranian Infighting, Shows Economic Power
The US has pivoted to a full economic blockade of Iran. You can tell it's highly effective by the state of agitation in Iran, which has descended into infighting on how to deal with this. Economic warfare isn't perfect, but...
Blockade Cuts Iran's Oil Revenue, Offers Sanction Lessons
The blockade is a success. It's crimping Iran's oil revenues materially while barely pushing up oil prices. There's an big lesson here. Had we done this to Russia, it wouldn't still be causing mayhem in Ukraine. Lots of lessons to...
De‑escalation, Not Manipulation, Drives Falling Oil Prices
This shock hasn't worked out the way alarmists made it out to be. De-escalation has meant oil futures (orange) have fallen and have pulled down the physical oil price (white) with them. This isn't manipulation or a sign of a...
Oil Shocks Barely Dent Global Manufacturing and Supply Chains
Oil shocks get sensationalized, but things don't look bad in global manufacturing. In fact, this shock barely registers in global supply chains. I'll move my posts behind a paywall in coming months, please consider signing up now to lock in...
Oil Pullback Ends Trade Narrative, Sparks Low‑Price Speculation
When a trade suffers the kind of pullback oil has now seen, it's over. A trade is just a story. It needs excitement and momentum. That's out the window and has been replaced by people asking how low oil prices...
Oil Surge Pushes Brazil Real Toward 4.50/USD
We're on our way to $/BRL 4.50. Oil prices aren't going to fall back to pre-war levels quickly, which lifts Brazil's terms of trade and the Real. I'm moving my posts behind a paywall in coming months. Please consider subscribing...
Egypt, India Keep Floating Currencies to Shield Against Oil Shock
Egypt and India stand alone among the major EMs in allowing their currencies to adjust freely to the spike in oil prices. This will stand them in good stead. A freely-floating exchange rate helps protect you from bad shocks like...
Latin America Markets Surge on Expected Iran Peace, High Oil
At last week's IMF/WB meetings, markets were as bullish as I can remember on Latin America. They're trading an end to the war with Iran and oil prices staying elevated for a while, all of which benefits the region's oil...
7 Weeks of War: Oil Market Myths Debunked
In coming months, I'm moving my daily posts behind a paywall. Please consider subscribing now to lock in a low rate. Today I look at what we've learned about oil markets and Iran in 7 weeks of war. I go...
Commodity Forecasts Falter: Dated Brent Predictions Missed
Would love to hear from all the folks who just days ago told us that Dated Brent can only go up and the gap to futures will inexorably widen. But of course today all you hear is crickets. We all...
Western Media Exaggerates Iran's Leverage, Impact Minimal
Western media mostly paint Iran as having all the leverage, just like they painted Russia with all the leverage back in 2022. It's all nonsense. This shock in terms of global supply chains is nothing compared to COVID. The West...
Oil Experts Wrong: Dated Brent Drops $20 Overnight
Most oil "experts" are industry shills. They told us that Dated Brent can't fall because the physical shortage is too great. Well, Dated Brent fell $20 in one day on Friday. The stuff from these guys is just scare-mongering. Same...
Iran's Conditional Strait Reopening Fails to End US Blockade
Iran hoped its announcement that its reopening the Strait would cause the US to lift its blockade. That didn't happen because Iran's reopening wasn't unconditional. There'll be lots of this back and forth, but that's just negotiation. The war is...
Turkey's Record Current‑account Deficit Stems From Domestic Policies
Turkey's in trouble for the same old reason. The current account deficit in Jan & Feb 2026 is the widest ever except for Jan & Feb 2023, when Lira ended up sharply devaluing. Turkey's problems have nothing to do with...
IMF Underestimates Growth After Major Economic Shocks
IMF growth forecasts are much too pessimistic when they come right after big shocks. It was that way in Apr. 2025 after "Liberation Day" and it's like that again now. I talked about this on this morning's live stream that...
Emerging Market Outflows Near COVID Shock Levels
The past 7 weeks of conflict have seen capital outflows from EM that were almost as bad as during COVID, which was a massive shock. I'll talk about this and where we are on the Strait of Hormuz (is it...
Brent Dips Below $100 as Hormuz Conflict Wanes
Dated Brent (white) yesterday fell below $100 for the first time in over a month. There's conflicting headlines on the Strait of Hormuz, but the direction of travel is clear: this war is basically over. Both sides - for different...
Emerging Market Outflows Near COVID Levels, Live Stream Tomorrow
I'm doing a live stream tomorrow morning at 9:30 am (ET) with a summary of all the chatter around this week's IMF/WB Spring meetings, including a discussion of this chart, which shows that EM outflows over the past month were...
US Oil Blockade Opens Strait, Offers Ukraine Lessons
Big thanks to @biannagolodryga for having me on @CNN to talk about the US blockade of Iranian oil and its role in reopening the Strait of Hormuz. Lots of lessons to learn here, especially on how the West confronts...
Europe's Inaction on Russian Oil Fuels Ukrainian Suffering
As a European, I hang my head in shame. The US has shown that if you blockade an oil exporter, they fold quickly. Europe can do this to Russia and shut down oil tanker traffic out of the Baltic. But...
Strait of Hormuz Reopens, Physical Oil Prices Converge to Futures
The blockade called Iran's bluff and the reopening of the Strait of Hormuz in response is a remarkable success in very little time. Physical oil prices (white) will now converge down to futures prices (orange), a scenario most didn't think...