1. Inflation Is Back in Focus
U.S. consumer inflation comes in at 3.4%.
Lots of noise about inflation out there, and rightfully so. Oil prices have soared over the past few weeks, and we are now seeing diesel prices surpass some big levels.
This is going to impact prices.
However, don’t overlook the demand destruction that could be happening.
2. Yields Keep Climbing
Yields keep on climbing, with the trend and underlying fundamentals (at the moment, at least) suggesting we could easily see a continuation of this.
This is happening as there’s tons of debt out there. Not just government debt. There’s a lot of corporate and consumer debt too.
There could be some serious consequences.
3. Oil Is Sliding, But Don’t Be Fooled
Oil is sliding lower today, but make no mistake: there are some big things happening in the background.
There’s escalation in the Middle East: oil tankers getting blown apart. Plus, lots of noise about the Bab al-Mandab Strait getting closed/becoming dangerous.
Saudi oil exports apparently dropped to decade lows.
The Russia-Ukraine war is escalating too.
War premium is back in the oil market but also remember that a lot of this is headline-driven moves. Allocate wisely if you choose to trade this.
4. Canada’s Trade War Problem
In Canada, the topic of discussion remains the trade war and its consequences.
What’s also worth noting is that bond yields in Canada are rising too. It’s very likely the Government of Canada will have to issue deb to soften the blow of trade war, so it will be interesting to see how the fiscal situation changes.
But higher oil prices are a positive for Canada. Exports will look great.
Also, don’t forget: the bigger problem for Canada remains consumer debt/debt in general, and a short-term stagnant economy.
5. S&P 500 At a Critical Level
Did you catch that? The S&P 500 closed close to its 50-day moving average. Will it bounce or go below it? Keep in mind: the 50-day moving average has acted as a strong support level for the index. A move below the moving average brings sellers.
Gold is bouncing as oil and yields retreat a little. $4,300 is a big level to watch.
A very sizeable move is happening in Bitcoin. But let’s see if it continues.
Odds of a rate hike by the Fed shoot higher. The bond market has already raised rates.