Waterways
SPY•Multiple shipping chokepoints add to the pressure
Mills highlighted several potential trade chokepoints, including Houthi disruptions in the Red Sea, record-low Rhine water levels, growing risks to Black Sea shipping from the war in Ukraine, and El Niño-related draft restrictions at the Panama Canal.
Morgan Stanley flags a NOAA Relative Oceanic Niño Index (RONI) scenario that would surpass every El Niño event since 1950.
“While evidence remains uneven, we are seeing the first indications of market transmission in selected commodities and company disclosures,” Morgan Stanley strategists say.
NOAA stands for the National Oceanic and Atmospheric Administration, a U.S. government agency that monitors and studies the oceans, atmosphere, weather and climate.
Supply chain shock raises worries about growth and inflation
Concerns about the impact of the supply chain shock are paramount, with market participants questioning whether the disruption will prove temporary or become a more persistent drag on growth and inflation.
“The economic fallout has not yet fully materialized. But it will hit the global economy soon enough, and when it does, markets will be scrambling to catch up,” says Alex Mills, an international trade expert at Atlantic Council.
It’s not just the Strait of Hormuz, where maritime trade accounts for 19% of global liquefied natural gas (LNG), 25% of global oil trade, and 30% of fertilizer trade.
