The economic situation is becoming inextricable unless new models are invented. The COVID has highlighted extraordinary debt capacities but without any link to the real economy. The world's public finances are bright red and the "whatever it takes" is in the trillions of dollars, suggesting that money was not a problem and that the magic slate could exist. A modern-day version of the Danaides' barrel. 

The pandemic is coming to an end, but driven by an international populist wind, which is blowing ever stronger, the "welfare state" is called to the rescue on all fronts, which contributes to the further degradation of public finances. 

The shockwave of the war in Ukraine has disrupted all commodity markets, which in turn have fuelled the post-COVID price hike. The question remains as to how to reduce inflation due to a contraction in supply when, at the same time, each increase in key interest rates tightens the noose around the throats of the states, given the heavy burden of the debt? 

The most fragile elements of the economic sphere seem to have to be swept away. Crypto-currencies are in the eye of the storm, especially those on paper that are the most stable because they are indexed to the US dollar. The collapse is so violent that it is feared that the equity markets will explode. China, mired in its zero COVID policy, is seeing its real estate flagships so indebted that they can no longer meet the interest payments on their abysmal debt. 

In such a context, the US dollar remains the preferred safe haven, which explains its flirtation with parity, which will soon succumb. 

Meanwhile, our market was looking at the WASDE report for May, which contains a few points to remember: 

• A drop-in consumption that we believe is largely underestimated 
• A drop-in production, also largely underestimated (due to a combination of bad weather conditions, the dizzying rise in production costs and competition with food crops, which are also at the peak of their production). Will American and Indian production be able to withstand the current heat waves? 
• Some situations are more enigmatic: why continue to produce at this rate in Australia when the main customer, China, no longer wants to buy a bale? 
• China, Bangladesh and Vietnam remain by far the main destinations for cotton exporters, followed by Turkey and Pakistan. 

The report had only a limited effect on prices as it seems that the June report will bring its share of surprises against the background of the July 2022 deadline. 

At this stage demand is picking up, which is not surprising as the need exists despite yarn prices tending to stagnate. However, it should be remembered that the price of yarn is above all an average of the prices of different contracts. The time lag in the prices of the concluded contracts generally makes it possible to smooth out the rough edges and to maintain margins while waiting for new increases. 

We continue to believe that the market should continue to consolidate on its season's highs.