US fuel demand recovering

Travel demand improving

Chart of the Day

Just a note that there will be no newsletter either Friday or Monday.

The weekly EIA report showed the amount of gasoline supplied to the US market rose by 0.3 mn barrels last week. It is now 3.3% lower than their average at this time of year over 2017-19, demonstrating that fuel demand is slowly recovering as the vaccinations continue. Analysts are now looking for whether fuel demand could surpass pre-virus levels - although commuting demand might remain low, that could be offset by higher travel demand during the summer as people catch up on trips and some shun air travel.

Macro

Ahead of the US non-farm payrolls report on Friday, the ADP employment report showed an increase of 517,000.

In Canada, GDP rose by a strong 0.7% MoM in January, which took growth to -2.3% YoY. The leading indicator suggests growth should continue to recovery.

Eurozone inflation rose to 0.9% in February, while core inflation fell to 1.1%. Labor compensation suggests there are still downside risks to inflation.

Markets

The weekly EIA report also showed that US crude production rose by 0.1 mn barrels last week, so might finally be responding to rising prices.

It was a strong day for the agricultural commodities yesterday. Soybeans rose by 5.1% and corn rose by 4.6%. For now, they have yet to break out of their recent trading ranges.

The Dow Jones Transportation Average underperformed to the S&P 500 yesterday, with a fell of 0.6%. But the DJTA has risen by 4.1% in the past week, so has outperformed the S&P 500, which has risen by 2.2% - some will take the good performance for those companies as a sign the equity market still has momentum.

Typical risk-on trades are not doing that well though. A selection of assets that typify the risk-on trade has been little changed this past week, much like an alternative selection that typify a risk-off trade.

When hedged into foreign currencies, US yields are the highest in years, which could dampen further yield increases.

It was a strong day for the main cryptos yesterday, with ethereum now testing a new record high as well. Bitcoin is currently up by 12.4% in the past week, and up by 18.4% in the past month. Ethereum is up by 25.5% in the past month.

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