Is $120 Oil The Breaking Point For Global Growth? | Bond Markets Send A Clear Signal | ET Now

追加: 2026-05-10

[00:00:00]So that's broad brush uh how pieces are playing out. Let me bring on board Richard Yatsena who's economist at&Z group joining us uh this morning to give us a perspective of how he's seeing all the developments. Richard, great having you. Give us a sense first off. Let me open it up. Uh what what are you making of everything that's playing out largely controversial? Uh there are comments on tariffs. There's that escalation in the Middle East. You expect a quick resolution, especially with regard to the Middle East conflict?

[00:00:33]>> Look, I have expected a quick resolution, but here we are two months in. So, I've been wrong on that. You would say this is going for longer certainly than than I expected. Uh, by the same token, I think economies have shown themselves actually to be in reasonably solid shape. even the you know the energy importers uh Indonesia, India uh the Philippines obviously they've been marked a little bit differently to some of the other economies in the region uh but you you would say actually the global economy is handling what is an unprecedented oil shock uh you know relatively well Richard how do you look at uh the spiking yields u the 10 year crossing the 4.4% 4% mark. The 5year uh is above the 5% mark. Do you think that uh that uh this will now prompt a lot of equity uh unwind and then money going to bonds and fixed income?

[00:01:32]>> Look, not necessarily. I think the movement in yields is is telling you the way the bond market's viewing this in terms of is this a kind of an upside price shock predominantly or is it a downside growth shock predominantly? And clearly it's still pricing this as an upside price shock. So that's not necessarily an environment in which you would expect maybe the equity mark to be weak or the credit markets uh to be weak because I think the bond market saying the growth impact is is going to be manageable. I I think that's right. I mean ultimately whatever's going on around the straight of Hormuz we need to get more uh oil flowing into the global economy but so far inventory levels are being used that's what they're there for. Um and I think the market's probably got uh at least until the end of this month before it will get kind of acutely concerned about what's happening to physical supply.

[00:02:29]You know you mentioned that you know you got it wrong when uh you were predicting how long this entire crisis would be uh and is now extended for 2 months and by going by what uh President Trump is saying that it will take another two to three weeks you're looking at entire May uh what could be the impact uh going forward for many of the emerging markets on Asian economies in your view uh if this extends beyond May.

[00:02:58]Look, I I I think if if we're still having this discussion in the month, then I I think it's a much more tenuous balance between that upside growth uh sorry, upside inflation element and the downside growth element. And I would expect that to widen the divergence in market pricing across the Asian economies because remember we we kind of have two shocks here. One is the oil shock which is two months old. The other one is the tech shop which has been going for a couple of years and continues to accelerate and that's obviously a a positive growth shock particularly for North Asia. And so that's part of the reason we have this regional divergence. But even with that positive tech shock, I think if we still have oil prices at $120 uh in four or five weeks time, I think even that will start to face some more meaningful headwinds uh because of the likely impact of high oil prices on if you like the availability of energy, not just the price but the physical capacity to deliver energy.

[00:03:55]Ch do you do you think that there's going to be a bit of a lag with regard to the impact because uh it it does take logistically it does take some time for crude originating from uh West Asia to reach some of the energy deficit countries which which you were speaking about at the start of this conversation.

[00:04:15]Do you believe that that may actually be there may be a lag there and and maybe the the entire impact of that or the full impact of that will only be seen in the current month.

[00:04:29]>> Look, I I I think you're right to talk about the lags and certainly they have have been in evidence. Um there's only so far you can stretch the elastic band though before I think you start to see some concerns about future supply come to dominate current thinking. So whether in fact we are facing physical shortages in a month is is still an open question.

[00:04:49]Uh but certainly you're much closer to those than you are today as as closer as and certainly closer than you were a month ago. So already two months in I think we are starting to stretch that friendship um a little bit and I'm getting less comfortable about relying on the lags as to bring a degree of comfort.

[00:05:08]Currently Richard what are you pricing in in terms of an impact on growth in terms of impact on inflation especially in the emerging markets which are energy deficient like India for example >> what is it that you're seeing or what is it that you're expecting on ground from an economic perspective >> so early in this crisis we took about two points off our global growth forecast for this year and obviously a little bit more off off some economies although India for instance had some reasonable momentum I think um that we we weren't outsized in terms of our impact there but now we're getting into much more kind of a territory of longer duration um and the biggest revisions actually have been on our inflation forecast where we've continued to adjust those forecasts and and in fact bring in central bank tightening now in India we don't expect the central bank to be moving but certainly we have seen that in Australia we have seen that in Singapore we have seen that in the Philippines and even in the advance advanced economies. We've seen the Fed kind of shift away from easing the ECB and both and the Bank of England at least some members actively uh canvas tightening. I I still think we're in an environment where a lot of the growth impact is a forecast impact if the crisis doesn't finish. If we can finish the crisis or or wind it up in a way that at least gets the oil flowing in a reasonable t period of time, I think the growth impact is transitory. Um, but if we start to get into serious physical shortage and serious damage to energy infrastructure, um, then we're looking at at kind of more of a lost 2026.

[00:06:47]>> Okay. Uh, Richard, great having you. I mean one of those leading voices uh in the Asian region.