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US Markets Could Open Lower as Oil & Gold Rise

US equity, S&P 500, Nasdaq and EUROSTOXX 50 futures slipped. Meanwhile, Hong Kong stocks surged as the city eased restrictions to contain the spread of the coronavirus. Fighting in Ukraine continues, and investors are watching closely for a peace deal. On Sunday, Turkey’s foreign minister stated that he was hopeful for a ceasefire as the two sides could be reaching an agreement on “critical” issues. Investors are also keeping their focus on whether Russia would meet more interest repayments this week. $615 million in coupons need to be paid this month, while a $2 billion bond is due on April 4.

Oil on the Rise Again

In oil price news, brent oil price climbed above $110 a barrel while WTI oil rose to about $108 a barrel. The prices are under pressure due to the Russia and Ukraine conflict. The latest spike in oil prices was further boosted by the European Union government possibly imposing an oil embargo on Russia over the Ukraine invasion.

Metals

Today’s gold prices rose as demand for the safe-haven metal did not subside. Gold continues its rally on the back of the Ukraine crisis and despite Fed’s plans to curb inflation with more aggressive measures.

Palladium also gained. The metal used in automaking for the production of catalytic converters, hit a record high on March 7 over fears that supply from top producer Russia could be disrupted.

US Treasury Yield Curve Flattening

Traders are waiting for Fed Chair Jerome Powell’s speech today. The Fed raised interest rates to fight the highest inflation in the nation in four decades. Investors expect the Fed to raise its target rate to about 2% by the end of 2022.

The Treasure yield curve flattened in the last weeks with the spread between the two- and ten-year yields decreasing to only 21 basis points. This is the smallest level reached since the beginning of the pandemic at the start of 2020. The bond market could be indicating caution over risks emerging from the ongoing war and the rising of US interest rates.

Last week, the boosted treasury yields helped raise the US dollar against the yen to its highest level since early 2016 as the Bank of Japan is committed to maintain its yields close to zero. The US dollar fell against other some other currencies, possibly and partially because history shows that when the Fed starts a tightening campaign the US dollar could have a declining tendency.

What to Watch out for this Week:

Monday
Fed Chair Jerome Powell and Atlanta Fed President Raphael Bostic’s speeches

Tuesday
European Central Bank President Christine Lagarde speaks at BIS innovation summit

Wednesday
European Central Bank President Christine Lagarde speaks at BIS innovation summit
EIA crude oil inventory report
Bank of England Governor Andrew Bailey & Fed Chair Powell speak at BIS panel
U.K. Chancellor Rishi Sunak’s “Spring Statement”

Thursday
NATO emergency summit in Brussels
Eurozone Markit PMIs
U.S. initial jobless claims
U.S. durable goods