A Reuters Open Interest newsletter |
|
|
Stocks rose and oil prices and bond yields dropped on Wednesday, on hopes that the U.S. and Iran are progressing towards a peace deal. Investors' optimism was reflected in the MSCI All Country equity index clocking its biggest rise in six weeks. In my column today I look at the recent surge in bets on higher interest rates in light of the Middle East energy shock. Essentially, markets have overshot - the move may be logical, but its magnitude is questionable. I'd love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social. |
|
|
- STOCKS: A sea of green. Asia, Europe, Americas all higher - standouts being Japan +3%, Euro Stoxx and FTSE 100 +1.4%, Mexico +3.6%. Wall Street's big three indices up 0.5-0.8%. MSCI World up ~1%, best day since February 9.
- SECTORS/SHARES: Nine of the 11 sectors in the S&P 500 rise; materials +2%, consumer discretionaries and healthcare +1%. Energy -0.5%. Amazon and Nvidia +2%, tech firms Intel, AMD, Super Micro Computers and Hewlett Packard all up 7-8%.
- FX: Dollar up broadly. USD/JPY back up near 160.00, AUD is biggest G10 decliner.
- BONDS: U.S. bonds rally, curve bull flattens. 2s/10s curve below 44 bps, lowest close since August. Like yesterday's 2-year sale, today's 5-year auction is very weak.
- COMMODITIES/METALS: Oil -2%, gold +2%. Comex copper +1.5%.
|
|
|
* News of great import Figures on Wednesday showed that U.S. import prices in February rose at their fastest rate in four years, up 1.3% after an upwardly revised 0.6% gain in January. The price of imported capital goods rose the most since 1988. Rising energy costs in anticipation of conflict in the Middle East were blamed. But remember, oil rose around 15% in January and February - it is up 35% so far this month. Consumers and businesses should brace for even stronger price rises in the coming months. * Premium service The valuation premium that U.S. tech has long enjoyed over the broader stock market has almost evaporated. Measured by comparable forward 12-month price/earnings ratios, it is now the smallest in seven years. The Roundhill 'Mag 7' ETF is down 10% this year, three times as much as the S&P 500. Has the correction run its course? JPMorgan reckons the AI story is still losing some momentum, Barclays says the tech growth engine shows few signs of stopping. You pays your money, you takes your choice. * RoW finally selling Treasuries? Foreign central banks' holdings of U.S. Treasuries held in custody at the New York Fed are the lowest since 2012, and poised to fall below $3 trillion for the first time since 2010. The value of these holdings has tumbled $75 billion in the last four weeks. According to Deutsche Bank, that includes outright selling worth around $60 billion, the most since 2020. Foreign central banks were modest sellers of Treasuries last year, but that was offset by $440 billion of private sector purchases. If official selling is accelerating, will the private sector fill the gap? |
|
|
Inflation-spooked rates markets have overshot |
Markets overshoot, and the dramatic surge in bets on higher interest rates in light of the Middle East energy shock is the latest case in point: the move may be logical, but its magnitude is questionable. |
As the dust settles on one of the busiest central bank weeks in years, the Iran war shows no sign of ending and markets remain in flux. It may be time for rates traders to take a breath and reevaluate. |
What could move markets tomorrow? |
- Developments in the Middle East
- Energy market moves
- Japan services PPI inflation (February)
- Germany GfK consumer sentiment (April)
- European Central Bank policymakers Luis de Guindos, Pedro Machado and Patrick Montagner speak
- Bank of England policymakers Alan Taylor and Megan Greene speak
- Norway interest rate decision
- South Africa interest rate decision
- Mexico interest rate decision
- Bank of Canada Senior Deputy Governor Carolyn Rogers speaks
- U.S. weekly jobless claims
- U.S. Treasury sells $44 billion of 7-year notes at auction
- U.S. Federal Reserve officials scheduled to speak include Governors Lisa Cook, Stephen Miran, Philip Jefferson, and Michael Barr, and Dallas Fed President Lorie Logan
|
|
|
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. |
|
|
| | | | | Trading Day is sent every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here. Want to stop receiving this email? Unsubscribe here. To manage which newsletters you're signed up for, click here. This email includes limited tracking for Reuters to understand whether you’ve engaged with its contents. For more information on how we process your personal information and your rights, please see our Privacy Statement. Terms & Conditions | | | | | © 2026 Thomson Reuters. All rights reserved.
3 Times Square, New York, NY 10036 | | | |
|
|
|
0 comentários:
Postar um comentário