Market Strategy Video December 2014
As 2014 comes to a close, oil prices are down by 35%. Although many factors contributed to this outcome, the fact is that, just as non-OPEC producers were increasing their oil production this past July, the actual demand for oil proved to be weaker than expected. As a result, this oil price slide is not only is causing financing problems for some countries that rely on their oil revenue to balance their budget, it will also hinder the much needed stabilization of its market share in the short term. Additionally, it will have a significant impact on interest rates. On the one hand, the fall in oil prices will translate into a boost in spending power for consumers and a cost decrease for corporates in importing countries. Yet, on the other hand, it will also lead to a strong decrease in bond yields, thus creating a bleak outlook for an expected recovery mid-2015. With inflation remaining within the scope of the ECB’s price stability objectives, there have been serious discussions about the possibility of a Quantitative Easing program. As for specific developments on that front, only time will tell.
1. A marked fall in oil prices
2. The future of interest rates?
3. Keeping inflation in check