Kaohoon Morning Brief – 9 June 2022

1) It will be challenging for US Fed to bring inflation to target level, says IMF

International Monetary Fund First Deputy Managing Director Gita Gopinath said that it will be challenging to bring U.S. inflation back to the federal reserve’s 2% target without turbulence and expected that the inflation could remain above the target for a long time based on current projections.

“That’s an environment that we’re not used to being in, you could risk their inflation expectations de-anchoring,” she said.

U.S. inflation in April was 8.3%, a slowdown from March 8.5%, but still at a 40-year high.


2) Venezuela demands prepayment on spot oil sales

Venezuelan state-owned oil and natural gas company, PDVSA, began switching most oil sales to prepayment since last month after several recent defaults from buyers. The move resulted in a sharp decline of oil exports, leaving tanks storing the country’s flagship crude grade near full capacity.

Venezuela could accelerate its cash flow from this method, while buyers are also requesting further discounts as much as $47 per barrel to the Brent global benchmark price, compared to a discount of $35-38 per barrel earlier this year, according to Reuters.


3) Zelenskyy pushes US corporates to leave Russia and set up in Ukraine instead

The Ukrainian President Volodymyr Zelenskyy, speaking to U.S. business leaders at the Yale CEO summit, made a further push on U.S. companies that have not shut down their operations in Russia to exit the country and set up in Ukraine instead in order to pressure Russia for its action on invading Ukraine.


4) Japanese yen continues to depreciate further to near 20-year low

The weak Japanese yen is edging near a 20-year low at JPY134.24 to 1 dollar. The higher level was last seen in 2002 for JPY135.15 to 1 dollar. The yen has seen the largest depreciation this year fast-paced and aggressive interest rate hikes by the Fed and growing geopolitical tensions.