Hey everyone, I hope everyone is able to relax over the weekend. As a reminder we have Day Light Savings Time for most of us kicking off this evening at 2 AM ET so move your clocks forward 1 hour. Now let’s take a look at the markets. Get my take below on what I see going on at this time.
WEEKLY SOUND BITES:
Equity markets moved lower over another week of extreme volatility provoked by the Russian invasion of Ukraine. At its intraday low for the week on Tuesday, the Nasdaq Composite fell to a level that was nearly 22% below its recent peak, more than the 20% threshold that technically defines a bear market. At its low point, the S&P 500 Index was roughly 14% off its high, still in correction territory. A surge in commodity prices was most visible to consumers in oil prices will help fan the flames of inflation. The latest GDP Now first-quarter growth estimate from the Atlanta Fed is just above stall speed, at an annual rate of 0.5%. With inflation possibly running in the 8% to 9% range after those recent sharp price pops work their way into official gauges, investors can’t count on the Fed riding to the rescue of a 25% or 30% downdraft in stock prices
The consumer price index matched market expectations, rising 0.8% in February and 7.9% over the previous 12 months, the most since January 1982. Weekly jobless claims came in slightly above expectations, at 227,000, but remained at low levels. January job openings beat expectations at 11.26 million while a preliminary gauge of consumer sentiment in March fell more than expected to 59.7, a new decade low. Barron’s Basics CPI, comprising YoY changes in foods like meat, eggs, bread, milk, and produce, in addition to shelter, gas, and utilities. The YoY change in these items climbed 16% in February —and that’s before about a quarter of the world’s wheat exports and a 10th of the world’s oil exports effectively went off-line.
U.S. Treasury yields increased amid continued inflation concerns and some renewed hopes surrounding Russia-Ukraine negotiations. On Monday, the spread between 2- and 10-year Treasury yields (known as the Yield Curve) reached its tightest level since March 2020, but it began to widen as the week progressed. When the Yield Curve moves below zero is also considered an indicator—although not an infallible one—of a coming recession.
Core eurozone bond yields climbed after inflation expectations strengthened and the European Central Bank (ECB) surprised markets with the announcement that it could wind up its bond-buying program sooner than expected. The UK said it would stop importing Russian oil and gas by the end of 2022, supporting a similar move by the U.S. The European Union, however, unveiled a plan to cut Russian gas imports by two-thirds within a year.
Although Japan’s core consumer price inflation remains muted, the country’s producer price index rose 9.3% in February from a year earlier—the steepest gain on record—driven primarily by higher energy prices. Japan’s economic growth in the fourth quarter of 2021 was downgraded to an annualized 4.6%, from 5.4%, on a smaller rise in private demand.
Chinese markets recorded a weekly loss amid a resurgence in COVID-19 outbreaks. At the weeklong annual gathering of the National People’s Congress, the Communist Party-controlled parliament, Beijing set a goal for gross domestic product to expand “about 5.5%. China’s producer price index rose 8.8% in February from a year earlier, slightly above forecasts, while the consumer price index held steady at 0.9%, matching expectations.
Enjoy this week’s Round-Up
Don’t Be A Rat Brain Trader – Be The Red Stripe Zebra !!
Trade Smart !
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