Early Market Update and the Look at Libor and the Petroyuan.

In this report I cover the early market action from London on Wednesday, May 9th, 2018. I look briefly at the precious metals, the stock market, the dollar, interest rates and the oil price. I note that despite lower gold and silver prices in dollar the gold price is actually performing well against other major fiat currencies like the Swiss franc, the Aussie dollar and sterling.

I look closely at what is happening at the Libor reference rate and how the Federal Reserve is trying to compete with the City of London with its new SOFR reference rate. I note that I think Libor is not being used to bring the financial system down but that the move to using the SOFR could cause financial instability as more than $300 trillion of derivatives and loans are based off the Libor reference rate.

To conclude with this report I go over a Mish article on zerohedge about the Australian real estate market and I also update the viewers on the new Chinese oil futures contract (petroyuan) on the Shanghai International Energy Exchange. I note how the launch of the futures contract has been a success and how the September 2018 contract traded over 200k lots today (May 9th, 2018).