Modest unwind of Friday trade, it certainly could have been worse/What the banks said

Whatever safety trades were put on Friday in anticipation of an Iranian response are being partly unwound this morning with oil down, yields up, yen lower (approaching 154 even with another day of verbal jaw boning about intervention by the Finance Minister) and stocks up. With oil, the geopolitical premium will remain but with no direct disruptions to supply is what markets will inevitably focus on. We of course await to see how Israel responds. There was other action today in commodity markets though as the US and UK banned the trading of new (as opposed to existing/old) metals like aluminum, copper and nickel produced in Russia as they will not be allowed to trade on the Chicago Mercantile Exchange and the London Metals Exchange. Aluminium and nickel spiked 8-9% in immediate response but settled in to 2-3% gains. Copper right now is up almost 1%. Alcoa is trading up 4% pre market. 

The challenge though is when you sanction/ban the delivery of a fungible commodity, the products will just get sold somewhere else and there are plenty of parties that will buy it. 

Also of note in the commodity space and something to watch as we start shifting our air conditioners back on. In what will likely be another case of low prices curing low prices, the number of rigs pumping for natural gas fell to the lowest level since January 2022 to just 109. It was 166 in September 2022. We are bullish and long some natural gas stocks. 

Natural Gas Rig Count

Here were some of the key comments from the big bank calls on Friday and keep in mind, the spending they see from their customers are in nominal terms, as it is for everyone of course.