The financial week in five charts: Yentervention, refinery windfalls and a SpaceX splurge

RON BOUSSO, ROI Energy Columnist: The Iran war and its knock-on effects have removed roughly 5 million barrels per day of global refining capacity versus pre-war levels, giving refiners substantial pricing power and driving the margins for gasoline, diesel and jet fuel to record highs. That has helped boost oil majors' second-quarter earnings, but the gains are unlikely to endure because they reflect lost capacity rather than stronger underlying demand. ANNA SZYMANSKI, ROI Editor-in-Charge: SpaceX SPCX.O on Tuesday reported second-quarter revenue of $7.8 billion, beating analysts' expectations, but the stock price slid on Wednesday as investors focused on the massive rise in capex related to the company's artificial intelligence build-out. Total spending reached $18.4 billion in the quarter, including a staggering $15.8 billion on AI. The shares could eventually come under further pressure following the expiry of the first lockup period for insider holdings on Thursday, a development that could also put retail investors' iron stomach to the test. JAMIE MCGEEVER, ROI Markets Columnist: The U.S. Treasury's foray into the foreign exchange market last Friday to buy Japanese yen wasn't its first FX intervention and won't be its last. But it was one of its most unusual, not least because of the choreography leading up to the move, including U.S. Treasury Secretary Scott Bessent's yen purchase "to-do" list. Curiously, the Treasury used euros rather than dollars to fund those purchases. That could indicate Washington is reluctant to sell even small quantities of dollar-denominated assets with long-dated Treasury yields already at 19-year highs. Concerns about the bond market could also explain the use of the Fed's "FIMA" repo facility, which relieved pressure on Tokyo to sell Treasuries. The whole episode is a reminder that investors shouldn't get complacent about the latent risk that has long faced the U.S. bond market: a major creditor, such as Japan, could be forced to liquidate a significant portion of its enormous holdings of U.S. government debt, rapidly driving up borrowing costs. Is this likely to happen? No, but markets currently face a perfect storm: weakness in the yen, stress in Japanese government bonds (JGBs) and parts of the Treasury curve, and credibility issues at both the Federal Reserve and Bank of Japan. So caution is advised. MIKE DOLAN, ROI Finance & Markets Columnist: While the headline inflation-adjusted U.S. GDP figure may be underwhelming, nominal U.S. GDP clocked annualised growth of almost 8% in the second quarter. This rate has been exceeded only twice in the past three years and is almost twice the 25-year average. This is another sign that the U.S. economy is building a powerful head of steam and risks overheating. The pressure to tighten policy is mounting, and if it doesn't come from the Fed, it may well come from the bond market. GAVIN MAGUIRE, ROI Energy Transition Columnist: Several countries around the world have sharply increased imports of Chinese electric vehicles (EVs) this year while simultaneously reducing gasoline imports. We all know correlation doesn't equal causation, and the Iran war's negative impact on fuel imports is obviously playing a role here. But when the same pattern appears across multiple regions and income levels, it starts to look less like coincidence and more like an early signal of structural change. The provocative possibility is that China's EV export surge is beginning to reshape global gasoline trade flows.

The financial week in five charts: Yentervention, refinery windfalls and a SpaceX splurge

Hot margins

SpaceX splurge

Joint Yentervention

Overstimulated and a sign of things to come?

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