Episode summary
Commodity and Market Prices | Bloomberg Surveillance
Bloomberg Surveillance
· · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Shusuke Yamada, Ed Hirs, Suki Cooper, Julia Hermann
Summary
The episode focused on how tighter policy and geopolitical shocks are feeding through currencies, commodities, and rates. On Japan, the guest said authorities appear determined to defend 155 in yen, and that coordination with the US could make intervention more credible than a unilateral effort. He argued that if Japan fails again, the market may conclude officials have run out of options, and that a broader package could include faster BOJ hikes.
In energy, the guest said the global market is short refined products even if crude benchmarks are noisy. He argued that US refiners and exporters are benefiting from strong diesel and gasoline demand abroad, while Brent is a weak benchmark because very little Brent crude is actually produced. He said Chinese import cuts, Venezuelan supply returning, and higher UAE output have offset some of the loss from war-related disruptions.
On metals, the guest said gold still looks attractive because macro uncertainty and pricing for higher rates have not fully been unwound, and he expected further upside. He also said silver remains structurally undersupplied after five straight years of deficits, while platinum remains supported and palladium is tilting toward surplus. A market strategist then argued that higher long yields reflect term premium and tighter financial conditions, not a clean sell-America trade, and said the Fed can stay on hold while the curve does some of the tightening.
Key takeaways
- The Japan FX view was that 155 is the key yen breakpoint and failure to defend it could damage the authorities’ credibility.
- The energy guest said refined-product shortages, not crude headlines, are the real issue, and he called Brent a weak benchmark because production is tiny.
- The commodities guest said gold still has upside risk and set a Q4 average target of 4,650.
- The same guest said silver has been undersupplied for five consecutive years, which helps explain the sharp move in the metal.
- The market strategist said the Fed can stay on hold for a year because tighter long-end rates are already doing part of the job.
Notable quotes
“the authorities are determined to break 155 this time around”
“the cost of failure is too high because they couldn't break 155”
“the Brent benchmark is a fiction”
“we still see upside risk from here. We have 4,650 as our Q4 average”
How the episode opens
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Uh right now we want to turn our attention and and we decided we had to go to Japan. Shizuko Yamada drives the yen for Bank of America with wonderful academics out of the Massachusetts Institute of Technology and Stanford and joins us right now. Shizuko, are you surprised that we don't have a stronger yen moving from 162 stronger to 158 and your key breakpoint of 155?
Well, uh thanks uh for inviting me uh here. Well, I think uh the authorities are determined to break 155 this time around. Uh I think right now they're probably waiting for events such as the NFP prints uh tomorrow.
But uh this time around uh I think the cost of failure is too high because they couldn't break 155. If they can't break this time, um I think the market will basically assume the authorities have run out of options to defend the yen.
The romance of this is George Soros and a guy named Druckenmiller a few years ago where basically the market vigilantes tell the authorities what's going to happen. Is that an an ancient idea or is the market telling the authorities in Japan and for that matter the Secretary of Treasury what to do?
Yeah, well, I I think uh the Takaichi administration has uh potentially underestimated uh you know, the market force, uh, you know, up until now. But, I do think, uh, you know, the coordination with the US, basically means Japan cannot, you know, indefinitely rely on intervention because, you know, you ask someone to join your project, you have to have a goal.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- yen intervention
- japan fx rates
- us energy outlook
- gold moves
- tightening economic conditions
Companies and tickers mentioned
- BAC
- Bank of America
- Standard Chartered Bank
- New York Life Investment Management
Watch the episode
Watch “Commodity and Market Prices | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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