2022/03/02 (012) Column
Wall Street ends sharply higher today
10-Year Treasury Yield bounces off two-month low
Crude Oil Hits Near 11-year High, meanwhile above 110 USD
FED Chair Jerome Powell signals during Congressional testimony
Wall Street Ends Sharply Higher
The Dow Jones added nearly 600 points, the S&P 500 surged 1.9%, and the Nasdaq ended higher 1.6% after Fed Chair Powell reassured investors that the Fed remains committed to tame inflation while pointing to a smaller-than-expected 25 basis point rate hike in March. Still, Powell noted that the US economic outlook has become highly uncertain in the wake of Russia’s invasion of Ukraine and that the central bank would proceed carefully. On the corporate front, Ford surged over 8% after announcing it would split its electric vehicle and legacy production businesses into two separate units. Also, Nordstrom was up almost 40% after the retailer’s sales and guidance topped expectations. HP gained more than 6% after increasing its annual profit forecast amid solid demand for the hardware maker’s products.
10-Year Treasury Yield Bounces Off Two-Month Low
The benchmark 10-year Treasury note yield was around 1.86%, rebounding sharply from a two-month low of 1.68% hit early in the week. Market moves came after Fed Chair Jerome Powell told US lawmakers the US economy no longer needs such an accommodative policy stance, signalling a 25 basis point rate hike in March. Aside from Powell’s remarks, investors continued to follow developments around the Russia-Ukraine war.
Crude Oil Hits Near 11-year HighWTI crude futures surged past $112 per barrel on Wednesday, the highest since 2011 after the IEA warned that global energy security is under threat as the worsening crisis in Ukraine and broadening sanctions against Russia stoked fears of further supply disruptions. IEA executive director Fatih Birol said the current situation in energy markets is “very serious and demands our full attention”, following a decision by its members including the US and Japan to release 60 million barrels of crude from emergency reserves in an effort to alleviate the upward march in oil prices. Meanwhile, the OPEC+ alliance of major producers that includes Russia stuck to a planned output increase of 400,000 barrels a day in April.
Canadian Dollar Hits 5-week High
The Canadian dollar appreciated to its highest level in five weeks against its US counterpart, changing hands around $1.2630 after the Bank of Canada kickstarted its rate-hike cycle to wrestle inflation down from a three-decade high. The central bank increased its target for the overnight rate by 25bps to 0.5%, the first hike since October 2018, retreating it will use its monetary policy tools to return inflation to the 2% target. On top of that, strengthening prices for metals and crude oil on the heels of the ongoing Russia-Ukraine conflict boosted the appetite for the commodity-sensitive currency.
German 10-Year Bund Yield Rises Toward 0%
The yield on the German 10-year Bund eased again toward 0%, after falling into negative territory for the first time sice late January in the previous session as Russia and Ukraine are expected to head for the second round of cease-fire talks. Meanwhile, money markets brought forward wagers on a quarter-pointEuropean Central Bank rate hike to year-end from 2023, after data showed consumer prices surged to an all-time in February. Still, concerns over the Eurozone’s economic growth mounted due to higher prices of commodities and energy as Western nations announced harsh sanctions on Russia.
European Stocks Rebound on Wednesday
Europe’s major stock indices closed higher on Wednesday, after suffering losses in early trading, as traders continued to assess the economic impact of the war in Ukraine and economic sanctions on Russia. Energy and mining stocks outperformed on the back of rising commodity prices, autos and banks underperformed, while Sweden’s Ericsson ended 9.7% lower after the US department of justice said it failed to make adequate disclosures about its Iraq operations. On the data front, Germany’s official jobless rate edged lower to a pre-pandemic low of 5% in February, while the Eurozone’s annual inflation rate rose to a new all-time high of 5.8% last month, above market forecasts of 5.4%. Domestically, the DAX closed 0.9% higher, rebounding from a 1-year low, and the pan-European Stoxx 600 gained 1.1%.
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