00:00Take stock of what you've seen through the Asia session. I mean, we are at a three week high for
00:04some of these Asian markets or for the Asian equity markets as a whole.
00:09We can ask lots of difficult questions about how long this lasts. But at the very at this very moment,
00:14risk assets are being bought.
00:18Yeah, good morning. That's that's that's the setup. And it all hinges on the cost of energy.
00:24Right. So we've seen the big declines in crude oil, WTI, the largest drop since the covid era and natural
00:34gas prices falling as well after this ceasefire agreement.
00:38The hope being that energy will be able to flow back into the global economy and relieve some of those
00:43pinch points that we've seen emerging in recent weeks.
00:47So that does a number of things. I think, first of all, it boosts risk appetite in general, but it
00:52also lowers costs in the economy.
00:54So that's favorable for the equities markets. So that's why you see gains there.
01:00It also reduces the inflationary impact in the economy. And so that's good news for bond markets.
01:07So perhaps a little bit counterintuitively, they're also having a big day.
01:11People taking away bets that central banks might hike and putting back on a little bit of a hint that
01:18the Federal Reserve, for example,
01:19may actually ease monetary policy later in the year. A couple of other interesting nuggets for you as well.
01:27So we've got a much weaker dollar. The dollar had been a haven through this so far. We've got emerging
01:32market currencies performing strongly.
01:33We've got in credit markets a couple of interesting things. Some new issuers coming to market suggest that maybe they're
01:39seeing this as a window of opportunity
01:40as spreads tighten again to get some deals away. And Pakistan, the standout gauge in Asia's markets,
01:47they, of course, paid a role as an intermediary in the talks and their market is getting the benefits from
01:52that.
01:54Paul, what do I need to sustain the faith?
01:59Yeah, I think two things that are very important to see that the ceasefire actually holds and that the, you
02:06know, missiles stop flying.
02:07And two, that we start to get some shipments coming out of the Straits of Hormuz.
02:12There's 800 or so laden cargoes waiting to get out through that channel, which can do more than 100 a
02:18day in good conditions.
02:19I think that the market really needs to see that flowing pretty quickly in order to realise the assumptions that
02:25have been made in the market so far
02:28and justify the price moves that we've seen.
02:34Paul, incredible moves in bond markets. I know we've seen some of that in Asia, but certainly here in Europe,
02:38you've described maybe a little counterintuitively, but this could flow into equities as well.
02:46Yeah, yeah, yeah. So I think what we saw in Asia with the RBNZ is a little bit of a
02:50hawkish hold there.
02:52But what they're saying is, you know, if we see second round inflationary impacts, then we might need to hike
02:57interest rates.
02:58Otherwise, we might hold off. And so that's what the market is starting to price in more broadly with energy
03:03prices coming down again.
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