Rarely has the energy market been such an important driver of global economic conditions. In this full report, we look at what to expect from oil and gas. We learn that European utilities are resilient but are far from immune to crises. And we look at the growth in renewables and how that is going to develop in 2023. Executive summary Oil, gas and power markets are to remain tight Both oil and European gas prices may be off those highs we saw earlier in the year, and immediate gas supply worries have eased recently. Demand concerns, however, are weighing on sentiment for oil. We do expect both markets to tighten again in 2023 and that, of course, suggests higher prices. European utilities are resilient but not immune to crises European utilities will continue to be driven by opposing forces in 2023. The recent financial distress of a few strongly dependent on Russian gas supply is concerning. Nevertheless, the reality is that most fared very well this year and will continue to do so in the next. The growth in renewables, batteries, CCS and hydrogen infrastructure In 2023, we expect key technologies, including wind, solar, batteries, CCS and hydrogen infrastructure, to continue growing. Headwinds from supply chain disruptions and higher interest rates will likely persist, but policy support and company climate commitments suggest positive capacity growth. Read the original analysis: 2023 energy outlook: From power to utilities to renewables

Western economies are in decline while hiking rates as recession here looks more likely. Where will the USD go in 2023 and what is the outlook for US equities into the new year? Clifford Bennett talks with Andrew Geoghegan on The Drop ausbiz TV.

Gold price looks to end 2022 flat at around $1,800. Fed's policy outlook and performance of Chinese economy will impact Gold price in 2023. Market positioning and technical outlook suggest that XAU/USD could stay bullish next year.  Gold price started 2022 in an indecisive manner after having spent the last quarter of 2021 fluctuating at around $1,800. Toward the end of February, XAU/USD rose sharply and reached its highest level since August 2020 at $2,070 in early March. During the second and third quarters, however, Gold price fell substantially and registered losses for seven straight months, coming in within a touching distance of $1,600 for the first time since April 2020 in September. Gold price recovered decisively and gained more than 8% in November and managed to continue to edge higher in the first couple of weeks of December, returning to the mid-point of its annual range near $1,800. Gold price in 2023 will be driven by two major factors: The Federal Reserve's monetary policy and the performance of the Chinese economy. To have a better understanding of the big picture, we will also take a look at market positioning and supply-side dynamics. Gold price in 2022: A year in review Toward the end of 2021, the Federal Reserve warned markets that inflation was here to stay and acknowledged they have done a bad job forecasting inflation and realizing how entrenched it had become. With Fed policymakers clearly communicating their intentions to tighten the policy to battle inflation from the beginning of the year, the 10-year US Treasury bond yield gained over 17% in January and climbed toward 2%, causing the inversely-correlated XAU/USD to lose nearly 2% on a monthly basis. On February 24, Russia launched a large-scale invasion of Ukraine, which Russian President Vladimir Putin called a "special military operation." Two days later, on February 26, Western allies announced significant sanctions against Russia and eventually excluded Russia from global payment systems. Gold found demand as a safe haven amid escalating geopolitical tensions and gathered bullish momentum, rising above $2,000 in early March. Inflation, Fed and US T-bond yields Although geopolitical tensions remained high, the Fed's decision to hike the policy rate by 25 basis points to the range of 0.25-0.50.% after having kept it at 0-0.25% for two years forced XAU/USD to retrace a large portion of its monthly advance in March. From that point on, the Fed continued to tighten its policy rate at an accelerating pace while inflation proved to be even stronger and more persistent than initially estimated. The Consumer Price Index (CPI) soared to 9.1% on a yearly basis in June, marking the strongest pace of increase in prices since November 1981. US Consumer Price Index (YoY) In May, the Fed raised its policy rate by 50 bps before opting for 75 bps hikes in June, July, September and November. Fed policy rate During the Fed's aggressive tightening period, the yield on the benchmark 10-year US Treasury bond continued to rise sharply, reaching its highest level in 15 years above 4.3% in October. Gold, as a low-yielding asset, remained inversely correlated with US T-bond yields and stayed under constant bearish pressure.  As the Fed's unprecedented rate hikes during the second and third quarters of the year revealed the policy divergence between the US and other major central banks, especially the European Central Bank and the Bank of Japan, the US Dollar became the go-to asset for investors, with Gold losing out. The US Dollar Index, which tracks the US Dollar's performance against a basket of six major currencies, rose from 95.65 in early January to a multi-decade high of 114.78 by late September, gaining nearly 20% during that period. Following the November policy meeting, the Fed noted in its policy statement that policymakers will take cumulative tightening and policy lags into account when determining the pace of future rate hikes. This comment caused markets to price in a smaller, 50 bps, rate increase in December. Consequently, the 10-year US T-bond yield turned south and helped Gold price rise decisively in November. Moreover, inflation started to decline consistently in the third quarter of the year and the annual CPI and Core CPI stood at 7.1% and 6%, respectively, in November. At its last policy meeting of the year, the Fed hiked its policy rate by 50 basis points to the range of 4.25-4.5%. The Summary of Economic Projections (SEP), the so-called dot plot, revealed that the median terminal rate projection of policymakers rose to 5.1% from 4.6% in September's SEP. Although the hawkish dot plot helped the US Dollar limit its losses, Gold price didn't have a difficult time holding its ground with the 10-year US T-bond yield stabilizing at around 3.5% in the first half of December. China's zero-Covid policy The broad-based US Dollar strength...

Outlook: The new data in the US today is GDP, the Chicago Fed and the usual initial jobless claims. Tomorrow it’s core PCE, personal consumption and spending, and the Conference Board leading indicators.   Normally this array of fresh info would be interesting and market-moving, but the markets are only thinly populated these days and may brush off everything out of fear of no exit. GDP in particular is boring–it’s the final for Q3 and likely to be the same 2.9%.   The important information is likely that the consumer believes inflation is coming down. Reuters reports “Market-based inflation expectations show that on a five-year horizon, investors see inflation back at around 2.3%, whereas back in the summer, that rate was closer to 3.5%.” Further, the final reading of the core PCE index “is expected to show price pressures accelerated at a rate of 4.6% in the third quarter, in line with a second reading from late November. Sure, it's down from the 4.7% in Q2 and it's the third and final reading of what happened months ago now. But at 4.6%, it's still more than twice the central bank's 2% target…”   But never mind. Consumers almost never get it right. See the chart from Reuters. Finally, if we are not getting any action in the majors, the correct tactic is to look at the crosses. We saw EUR/GBP spike back in Sept and it appears to be in the process of spiking again today. But it’s halfway into the cloud and overbought on the Schaff, so don’t count on it. But if you want to attend to the most likely action in FX, it has to be the UK (not Japan!). The lack of management capability in government has become all too obvious–again. Historically, the UK government screws up in dealing with colonies, minorities, coal miners, teachers, unions, and anyone else who doesn’t go along with its own particular (stuffy, self-important, myopic) worldview. This time its public sectors workers, and while the nurses and ambulance services are certainly important, what seems structurally most appalling is the near-death experience of the Royal Mail.   Benjamin Franklin founded what became the US Postal Service and said the ability to communicate freely is a right in a democracy and deserves federal government funding. By Franklin’s standards, the Royal Mail should never have been privatized in the first place. Now, according to the FT, “Management at Royal Mail have told staff that neither the government nor regulator will ride to the rescue of the struggling 506-year-old former monopoly in a last-ditch attempt to convince postal workers to end their strike action over the Christmas period. “’We are now fighting for the life of this business’”, workers were told in a letter sent to them last week that was signed by chief executive Simon Thompson and eight other senior managers.   Staff at the former state-owned company, which is struggling to keep up with rival delivery services, first voted for industrial action five months ago in a dispute over pay and working practices. The CWU union has stepped up industrial action with a series of strikes this month with postal workers set to stage another 48-hour walkout on Friday.”   This is government mismanagement at its most obvious. In the US we live in a glass house and shouldn’t be throwing stones, considering the Postmaster General removed mailboxes ahead of elections and other shenanigans. We are still not getting all our mail on time all the time. But privatize the post office? It’s dumb, and dangerous. Anglophiles weep.   Happy holidays to all. Stop trading!     Tidbit: We tend to brush off the weather (except tsunamis and hurricanes), but today the news is everywhere–the US is getting a “major storm system, which the National Weather Service is calling a ‘once in a generation type event,’” according to Bloomberg. “More than 100 million people are currently under winter weather and wind chill alerts as record-breaking temperature drops are being observed.   “Denver International Airport saw a 37-degree drop in temperature over one hour Wednesday, which officials said is the biggest ever drop recorded at that location. That same day, Cheyenne, Wyoming, also saw a 30-degree drop in temperature in just 10 minutes. Governors in Georgia, Oklahoma and Kentucky have each declared a state emergency, as other state leaders activate emergency response operations. Major cities in the South -- including Nashville, Memphis, Birmingham, Alabama, and Jackson, Mississippi -- are all expected to see snow today.” Snow in Mississippi!     Note to Readers: Because markets will be thin and squirrelly around Christmas, there will be no reports on Friday, Dec 23 and Monday, Dec 26, a holiday in London. This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10...

Dollar Index can trade within 103-105 while Euro can remain within 1.05-1.07 region for the near term. EURJPY and USDJPY have bounced a bit and can test 142 and 136 respectively while Aussie and Pound may rise while above 0.66 and 1.20. USDCNY looks ranged within the broad 6.94-7.00 while USDRUB has bounced a bit and may re-attempt to test 72-74 while above 66/64. USDINR has scope to test 83 before falling from there. Watch price action near the upper end of the 82.50/60-82.80/83.00 range. EURINR looks ranged within 87-88.25 The US Treasury yields have risen back across tenors thereby keeping our bullish view intact to see more rise from here. The US PCE data release today will need a close watch to see its impact on the yields. The German yields continue to move up in line with our expectation. The yields have room to move up further from here. The 10Yr and 5Yr GoI have risen back but need to see if they can get a strong follow-through rise and move up further and avoid a fall. Dow is likely to trade within 32500-33500 region for some time. DAX has declined sharply giving back all the gains made on Wednesday. Nikkei and Nifty downside could be limited to 26000 and 18000 respectively. Shanghai has declined below the support at 3075-3065 and while below it there is scope to come down further in the coming sessions. Brent has fallen back but needs to sustain above $80 to move up to its crucial resistance in the coming sessions. WTI tested $80 as expected and has fallen back from there. Precious metals have fallen sharply after the release of upbeat US GDP data. The Q3 US GDP comes at 3.2% against a market expectation of 2.9%. Next focus will be the US Core PCE data which is due today. Kshitij is expecting PCE to come at 5.44 % against a market expectations of 4.96%. Gold may continue to trade within 1780-1840 range for some time. Silver has declined but overall outlook may remain bullish to see a rise towards the key resistance while above 23.25 and 22.70. Copper has fallen back but the key support at 3.76 and 3.70 are likely to limit the downside. Visit KSHITIJ official site to download the full analysis

Equity markets suffered a bruising year, crushed under the boot of rising interest rates and fading government spending. This weakness could extend into next year, as US valuations remain expensive by historical standards and leading economic indicators suggest a recession is a real possibility, spelling downside risks for corporate earnings. The good news is that every crisis passes, and any serious selloff might simply offer long-term investors more attractive entry points.