Business

In OPEC's latest annual World Oil Outlook released on Wednesday, the now defunct cartel (courtesy of Saudi Arabia's insistence on vetoing any production limit) said that demand for its crude will slide to 2020, as rival supplies continue to grow. On the supply side, OPEC said it would need to pump 30.7 million barrels a day by the end of the decade, which is 1.7 million barrels more than it projected a year ago but well below, or some 1 million barrels less than the group pumped in November.

• Oil up after U.S. crude stocks drop, still close to 11-year lows (Reuters)
• Global Stocks Rally; Mining, Metals Shares Lead Gains (WSJ)
• OPEC Sees Demand for Its Crude Oil Falling for Rest of Decade (BBG)
• The Trouble With Sovereign-Wealth Funds (WSJ)
• U.S. Calls for 256% Tariff on Imports of Steel From China (BBG)
• Iraqi troops expected to drive ISIS from Ramadi in days (Reuters)
• The Distressed-Debt Trades That Obliterated Bonus Checks in 2015 (BBG)
• China to Extend Yuan’s Trading Hours, Widening Currency’s Appeal (WSJ)

With memories of last week's high-volume, post-Fed, quad-witching selloff fading fast, overnight the Santa rally defined as no volume, no breadth levitation, has continued for a third day and moments ago European stocks rose to their best level of the day, with the Stoxx Europe 600 Index headed for its biggest advance in a week, while US equity futures ramped on the European open as they traditionally do, and then again hit session highs minutes ago, as holiday volumes are in meltdown mode, and oddlots can move the E-mini by 1 point.

While Sweden is over-flowing with excess cash on bank balance sheets, it appears that banks in Hong Kong are desperate to borrow Yuan (or scared to lend) as overnight HIBOR just exploded higher to 9.45% - a record for the interbank offered rate. The HKD and CNY/CNH FX markets remain relatively stable (with Yuan fixed marginally higher again for the 3rd day).

From sub-2% a week ago (before The Fed hiked rates) to 9.45%, the overnight rates has exploded...

When it comes to explaining why the post-crisis world has been defined by lackluster aggregate demand and a deceleration in global trade, all roads lead to China. 

Indeed, the country’s attempt to mark a difficult transition from an investment-led, smokestack economy to a consumption and services-led model has contributed mightily to an epic downturn in commodities which has in turn conspired with an expected Fed tightening cycle and a laundry list of country-specific political risk factors to push EM to the brink of disaster.