Kaohoon Morning Brief – 4 November 2021

1) The Fed will start tapering this month, inflation to ease next year

The Federal Reserve said on Wednesday that it will begin tapering the pace of its asset purchases later in November. The Fed will adjust open market purchases of treasuries to $70 billion per month of treasuries and $35 billion per month of mortgage-backed securities in November. For December, the Fed will adjust open market purchases of treasuries to $60 billion per month of treasuries, $30 billion per month of mortgage-backed securities.

In addition, the Fed predicted that inflation will fall by 2 or 3 percentage points in the next quarter, but the timing of inflation easing is highly unknown, although it is expected in the second or third quarters of next year.


2) Oil extended loss on U.S. inventories build and nuclear talks with Iran

Oil prices continued to decline after Iran and world powers agreed to resume nuclear talks this month which could lead to the removal of U.S. sanctions on Iranian oil, resulting in an increase in global supplies. Meanwhile, weekly crude stocks rose by more than 3.3 million barrels.

West Texas Intermediate traded at $80 per barrel, and Brent crude was at $81.37 a barrel.


3) COP26 vowed to phase out coal power

Signatories of the COP26 agreement showed that countries pledged to phase out coal-fueled power generation and stop investing in and building new plants to ease climate change. Rich countries will phase out coal-fuelled power generation in the 2030s, while poorer nations will phase out in 2040s.