This week’s Monday Macro View* takes a deeper look at how U.S. oil production is holding steady despite fewer rigs and frac spreads in the field. From mid-March to mid-July, Primary Vision’s FSC fell 18%, yet Permian completions dropped just 3%. Permian output even rose from 5.65 to 5.70 mb/d. What’s keeping things afloat? A steady drawdown of DUCs, operational gains, and a focused capital shift toward high-return zones. Primary Vision’s Frac Job Count confirms it—crews are still completing at pace, especially in the Permian. The current setup isn’t necessarily sustainable, but it does show how field activity can stay productive even as surface metrics decline.
Meanwhile, our Market Sentiment Tracker*turns to the U.S. manufacturing outlook, which may be quietly firming. The Philadelphia Fed Index surged to 15.9 in July, led by a jump in new orders and a return to job growth. It’s the strongest reading since April 2022, and alongside a rebound in the Empire State Index, it hints at regional stabilization. But trade headwinds loom. Tariff rates are near Depression-era highs, costing billions in import costs, raising inflation by up to 2.3%, and weighing on household income. So while July’s data offers real momentum, it comes with conditions.
Our Key Takeaways highlight Halliburton and Baker Hughes performance. Halliburton’s revenue rose modestly in North America, with LATAM and Europe/Africa showing strength. Net income bounced 1.3x QoQ, despite a 19% YTD drop in cash flow. Middle East softness and cost inflation remain risks, but automation, intelligent frac, and global diversification are cushioning the impact. Share buybacks continued, even as FCF fell ~31%. Baker Hughes also moved decisively—orders rose 9% QoQ, and EBITDA jumped 17%, buoyed by IET strength. Strategic moves like forming an OFSE JV and divesting $1.15B in assets mark a pivot toward energy tech and resilience. But BKR too is cautious on OFSE, signaling more upside in data-driven, capital-light segments.
This week’s Free Read zooms out to Japan, where bond yields are surging. The 10-year JGB touched 1.59%, with the 30-year above 3.2%—the highest since the financial crisis. Voter backlash, ballooning debt, and a slowdown in BoJ bond buying are shaking global carry trades and spooking investors. As Japanese capital flows shift home, global bond markets may face new pressure. This quiet stress test in Japan could ripple outward as markets recalibrate around higher funding costs and shifting yield dynamics.
Key Takeaways: Operators are holding production steady for now, but it’s engineered resilience, not baseline strength. Manufacturing is showing signs of life, yet trade friction could erode gains. Oilfield earnings point to cost-conscious growth, while Japan’s bond moves threaten to reshape global capital flows. We’re not in crisis—but the system is adjusting.
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