A flip by the FED?
Market participants have their eyes on Jerome Powell, yet again, as he hinted at the possibility of a flip on their previously more dovish tone.
At his latest speech, Federal Reserve Chairman Jerome Powell, seemingly went against his own speech a week prior, by saying that "We will take the necessary steps to ensure a return to price stability".
This less accommodative tone made investors panic a little, as they begin pricing in the possibility of a 50 basis point hike at each of the next 2 meetings.
Some relief was given to the market, as the major indices all moved up for the week, regardless of this news.
Mortgage rate surges
The average rate on the 30-year fixed mortgage hit 4.72% on Tuesday, moving 26 basis points higher since Friday. This move shocked economists, as they lower their expectations for home sales in the US.
The more aggressive tone from the Federal Reserve pushed the 10 year yield upwards, which caused a ripple effect, resulting in a surge in mortgage rates.
The housing market, with extremely high demand and low supply, finally seems to take a pause with this news as sellers reduce their prices with this high mortgage rates
US and EU agreement on oil dependencies
Fears of a divided front against Russia seemingly evaporated after the US and the EU agreed to a deal to reduce dependency on Russian oil.
This agreement will see that the US provide the EU with extra gas, equivalent to around 10% of the gas it currently gets from Russia, by year end.
Hopes are that the EU will be able to completely diversify away from Russian gas, as the President of the European Commission, von der Leyen said: "We want, as Europeans, to diversify away from Russia towards suppliers that we trust that are friends and that are reliable."
UK government lends aid to its citizens
UK Finance Minister, Rishi Sunak, announced on Wednesday that there will be an immediate cut to fuel taxes and a longer-term tax reduction for workers in hopes to mitigate the country’s historic hit to inflation.
Fuel duty will be reduce by 5 pence per liter for 12 months, a cut worth about 5 Billion Pounds. The government hopes that this will reduce the price of fuel at gas stations, and hopefully raise living standards of UK citizens.
The Bank of England anticipates that inflation will hit 8% in the second quarter, and cautioned against double digit inflation if the war against Russia does not end soon, and supply chain issues persist.
Russia hits back
Since its invasion Ukraine, Russia has been consistently hit by sanctions from the west, set to destroy its economy and make the war unsustainable.
It seems that Russia has taken a move against the west and their allies, by demanding that gas payments are to be paid for in Rubles.
This demand from Putin seems to have a good initial impact, bringing down the exchange rate for USDRUB from a high of 1:164 to 1:96.
This policy has not been set in stone yet, with many details left in the air for speculation. Russia did warn that the policy was only days away, which may mean that the aggression will be realised.
Upcoming events
Monday, 28 March
United States - Goods Trade Balance (February)
Tuesday, 29 March
United States - CB Consumer Confidence (March)
United States - JOLTs Job Openings (February)
Wednesday, 30 March
United States - ADP Nonfarm Employment Change (March)
United States - GDP (Quarter-on-Quarter, Q4)
United States - Crude Oil Inventories
Thursday, 31 March
China - Manufacturing PMI (March)
Singapore - Bank Lending
United Kingdom - GDP (Quarter-on-Quarter, Q4)
Euro Zone - Unemployment Rate (February)
United States - Initial Jobless Claims
Friday, 01 April
China - Caixin Manufacturing PMI (March)
United Kingdom - Manufacturing PMI (March)
United States - Nonfarm Payrolls (March)
United States - Unemployment Rate (March)
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