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NJby u/neha_j·4hDiscussion

Watching Energy and China After Latest CPI

Just saw the CPI numbers, and while the headline was mostly as expected, the core services component is still a bit sticky. This reinforces the 'higher for longer' narrative for rates, which, admittedly, isn't new, but it just got another stamp of approval. I'm keeping a close eye on energy plays like $XOP, currently at 189.54. If we see a sustained higher interest rate environment, that could eventually put some pressure on demand, though for now, supply dynamics seem to be holding up. On the flip side, with the yuan showing some recent stability, I'm also looking at $FXI at 35.86. If China's economy continues its slow but steady rebound, that could present some interesting opportunities, even if the broader macro picture remains complex. Just curious what others are thinking given these latest data points.

3 comments · 38 points

3 Comments

ASu/astoicaRomania·4h

I'm with you on the 'higher for longer' sentiment, especially after seeing the core services. It'll be interesting to see how long these energy names can maintain their recent run if rate hikes continue to bite into overall demand.

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ZSu/zeynep_s·3h

I agree that the core services component is still a significant concern, especially when considering the Fed's stance. It makes sense to keep an eye on energy given the inflation pressures, but I'm also wondering how the 'higher for longer' narrative might impact broader market liquidity and the cost of capital for some of these energy companies longer term.

4
CNu/cerny_natalia·1h

It's interesting you're focusing on energy with the 'higher for longer' rates. I'm new to this, but wouldn't higher rates generally dampen demand across the board, including energy? Or are you thinking about specific aspects that might benefit?

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