Friday Roundup: NY stocks sink amid inflation woes; Oil closes most volatile week on record on a high note; What to watch for

by Market Updates and Alerts |

NY stocks sink amid inflation woes, Treasuries yield rise; 

Stock markets tumbled and yields on US Treasuries rose after inflation picked up for the sixth straight month and the Russian attack on Ukraine showed no signs of abating. Oil fell and the dollar rose.

The S&P 500 (SPX) ended lower but well below session lows, with tech stocks leading the pullback. Treasuries fell across all maturity lines, pushing 10-year Treasuries (GT10) yields to levels not seen since Feb. showed inflation at the fastest pace in 40 years.

Crude oil fell below $107 a barrel in New York amid concerns that rising prices could dampen demand.

Markets have plummeted since Russia invaded Ukraine two weeks ago, with U.S. stocks experiencing the biggest swings in gains and losses since 2020.

Commodity prices have also fluctuated as investors grapple with uncertainty surrounding Russia’s attack on Ukraine, while inflation shows signs of slowing but still maintains pressure on policymakers to raise rates amid the threat. to contain the growth of the economy.

War takes its toll

Ukraine and Russia have failed to make progress to stop the war and reduce differences in the first high-level talks between their foreign ministers since the start of the Russian invasion. Optimism rose on Wednesday after it was signaled that Ukraine was open to discussing Russia’s demand for neutrality, provided it received security guarantees.

While the rise in U.S. consumer prices came in line with forecasts, the gauge reinforced expectations that the Federal Reserve will start raising interest rates next week to curb inflation, which some economists see rising above 8%. . That’s because the war in Ukraine and President Joe Biden’s ban on energy imports from Russia have restricted oil supplies.

Oil closes most volatile week on record on a high note

The market was rocked by news of the US ban on Russian oil imports and by what appeared to be the first signs of OPEC+ disunity.

Brent oil prices rose at the end of a week of unprecedented market swings, as Russia’s war in Ukraine kept markets on edge.

London futures were trading above $111 after posting the biggest bullish-to-low swing in history this week. West Texas Intermediate (WTI) has seen the biggest swing since turning negative in 2020 and was trading close to $108.

The market was shaken by news of the US ban on Russian oil imports and by what appeared to be the first signs of OPEC+ disunity. There continue to be signs that Russian oil is being shunned, with no buyers in a bid for oil from the country’s far east.

The aftermath of the war spilled over into commodity markets from wheat to major fuels such as gasoline and diesel, adding to inflationary pressure across the world. Rystad Energy predicted that Brent could rise to $240 a barrel this summer if countries continue to sanction Russian oil imports.

The increase in sanctions on Russia in response to the invasion of Ukraine has sparked fears that an already tight market could be stretched further, though OPEC and Chevron have stressed this week that there is no shortage of barrels. Banks like Goldman Sachs (GS) say only demand destruction can stop prices from rising.

“Extreme intraday volatility may say something about a number of things: degree of uncertainty, the nature of the news flow, the spillover of some chaotic spot markets, and relatively low liquidity levels at some points,” said Paul Horsnell, head of research at Standard Chartered commodities.

Oil prices
  • West Texas Intermediate for April delivery rose 1.8% to $107.90 a barrel at 7:02 am ET
  • Brent for May settlement rose 1.9% to $111.44.
  • Major oil futures have fallen to a six-year low in recent days as traders retreat from risk. Volatility skyrocketed and exchanges increased margins, effectively driving up the cost of buying and selling. Brent was as high as $139 a barrel and as low as $105 this week.
  • The United Arab Emirates urged the OPEC+ on Wednesday to ramp up production more quickly, although the country’s energy minister later appears to moderate that message. The cartel, which counts Russia as a key member, has resisted consumer calls to increase supply, arguing that the rise in prices is driven by geopolitical tensions rather than a lack of supply.

What to watch for

  • US: Consumer Confidence Index and Inflation Expectations/Mar – University of Michigan
  • Europe: EU Leaders Summit; Germany (IPC/Feb); United Kingdom (GDP, Industrial Production/Jan, Construction Sector Production/Jan, Services Index, Trade Balance); Spain (IPC/Feb)
  • Latin America: Brazil (IPCA/Feb); Mexico (Industrial Production/Jan)
  • Central Banks: BOE Survey on Inflation Expectations