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[Quick Facts]

1. Fed: benchmark rate will stay higher for longer.

2. U.S. lawmakers announce to impeach Biden.

3. Russia raises the production quota in OPEC+ in 2024.

4. The U.S. plans to buy 12 million barrels of oil to replenish its SPR.

5. Panama Canal is suffering the worst drought in more than 70 years.

[News Details]

Fed: benchmark rate will stay higher for longer

The Federal Reserve announced in its June policy meeting to keep interest rates unchanged (5% - 5.25%). The content of this policy statement has few substantive but only minor rhetorical changes as compared to that in May.

The dot plot showed that officials' interest rate expectations moved upward, implying a further 50 basis point hike later this year, slightly exceeding market expectations.

GDP growth forecast for this year was raised to 1.0% this year (prev. 0.4%); the unemployment rate forecast for this year was lowered to 4.1% (prev. 4.5%); and the core PCE forecast for this year was raised to 3.9% (prev. 3.6%). Overall, it appears that the Fed has plenty of confidence in a soft landing, while also believing that the current disinflation process may be recurring.

Jerome Powell insisted on defending the Fed's 2% inflation target and declared his attitude by saying "whatever it takes." But unfortunately, the dot plot does not seem to reflect the confidence of officials to reach the inflation target. At the same time, Powell thought that no rate hikes at this meeting should not be defined as a "pause in rate hikes." Instead, he believed it was just a slowdown in the pace of tightening and the benchmark rate will stay higher for longer. In addition, Powell has a cautious attitude towards inflation and seems very worried about the resilience of core inflation, which is contrary to the market expectations after the release of inflation data.

U.S. lawmakers announce to impeach Biden

Title 42 expired on May 11, prompting a large number of illegal immigrants to gather at the southern border. The scene is like a "zombie siege." Congresswoman Lauren Boebert announced on June 13 to introduce articles of impeachment against President Joe Biden on the southern border crisis. She said Biden must be removed from office for failing to comply with laws controlling illegal immigration.

The Republican congresswoman from Colorado invoked two articles of impeachment, accusing Biden of abuse of office and negligence which contributed to the largest influx of illegal immigrants in U.S. history and a record fentanyl abuse.

The passage of the impeachment requires only a majority vote in the House, but conviction and removal from office require a 2/3 vote in the Senate. And with Democrats in control of the Senate, there is little hope for a real conviction of the president himself or Biden administration officials.

Russia raises the production quota in OPEC+ in 2024

After a round of consultations on production, sanctions-hit Russia raised its production quota in OPEC+ for 2024. The new target is 994.9 barrels per day, up from the 98.28 billion bpd assigned to Russia at the end of the OPEC+ meeting this month. This is the level at which Russia committed to implementing a voluntary 500,000 bpd production cut starting in March.

OPEC said at the time that Russia's production could be revised as the country was working with secondary sources to update the output figure. The country had said it would stop publishing data on crude oil, natural gas, and condensates. OPEC believed that secondary sources have been overestimating Russia's production in the months since February this year, and that Russia's efforts to meet its goal of cutting production by 500,000 barrels per day have not been adequately reflected.

The U.S. plans to buy 12 million barrels of oil to replenish its SPR

The U.S. plans to buy 12 million barrels of oil to replenish its strategic petroleum reserves (SPR) this year amid falling oil prices, sources familiar with the matter reported. Last Friday, the U.S. Department of Energy said it had purchased 3.1 million barrels of oil from five companies, including ExxonMobil, with deliveries scheduled for August. The U.S. Department of Energy said the average price of oil to be delivered in August was about $73 per barrel, which is lower than the average price of about $95 per barrel in 2022. Last year, the U.S. government reportedly sold 200 million barrels of the reserves to the public, causing its SPR to fall to the lowest level since 1983.

Panama Canal is suffering the worst drought in more than 70 years

The Panama Canal is suffering the worst drought in more than 70 years, and the management has increased the draft limit for ships and reduced the number of vessels passing through. According to the Panama Canal Authority, much of Central America, including Panama, has been hit by a rare drought in the past few months, with water levels in lakes and rivers plummeting and water shortages becoming increasingly severe. Panama Canal Authority warned that the El Niño phenomenon appeared earlier this year than in previous years and expected a lack of precipitation in the coming months, so the drought situation will be severer. The industry is concerned that international logistics costs will rise as a result.

[Focus of the Day]

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