1. EM currencies hold up against oil
- Sixteen of 25 emerging market currencies analyzed by Bloomberg are trading near their highest levels in 15 years against Brent crude.
- Typically, oil market downturns drag down a list of oil-producing countries, and the impact bleeds over into broader emerging market assets.
- The data suggests that EM assets are right now tracking economic performances, with an obvious eye on the pandemic. But notably, oil is doing very little to their currencies.
- “If the virus is contained in the next few months and we get a strong economic recovery, I would expect EMFX to outperform oil prices,” Brendan McKenna, a currency strategist at Wells Fargo Securities in New York, told Bloomberg.
2. Rig count nears all-time low
- The U.S. rig count has utterly collapsed, falling to 465 on April 24, down 45 percent in just five weeks.
- The rig count is now closing in on the all-time low of 404 (reached in 2016), dating back 70 years. The low point before that was 488 in 1999.
- “Permian activity is now less than half that needed to offset declines; we estimate Permian oil liquids output will fall 1.08mb/d (23%) by year-end at current activity levels,” Standard Chartered said in a note.
- The bank estimates that output in the Bakken will fall from 1.39 mb/d in April to 1.03 mb/d in December, and output in the Eagle Ford to fall from 1.34 mb/d to 0.87 mb/d over the same time frame.…