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Real-time News
March 16th - As soaring oil prices fueled investor concerns about inflation and economic growth risks, the U.S. Treasury market has erased all of its year-to-date gains. A Bloomberg U.S. Treasury performance indicator has turned negative year-to-date after falling 1.7% since the end of February. Stagflation fears have pushed up yields, forcing Wall Street to lower its expectations for U.S. interest rate cuts over the next year. Morgan Stanley strategist Bradley Tian and others stated, "Energy-driven inflation and policy uncertainty continue to put pressure on long-term U.S. Treasuries." Bonds in the U.S., Japan, and Australia have all fallen, and a global bond index has also wiped out its year-to-date gains. Bob Savage, head of macro strategy at BNY Mellon, said, "Geopolitical uncertainty and increased cross-asset volatility are likely to persist in the near term until markets develop confidence that the conflict with Iran is stabilizing."According to the Wall Street Journal, the CEOs of ExxonMobil, Chevron, and ConocoPhillips warned US President Trumps officials that a war with Iran disrupting the Strait of Hormuz would exacerbate the energy crisis.According to the Wall Street Journal, the oil industry warns that the energy crisis caused by the Trump administration is likely to worsen further.On March 16, the Peoples Bank of China (PBOC) announced that it will conduct 500 billion yuan of outright reverse repurchase operations today (March 16) through a fixed-quantity, interest rate bidding process with multiple price levels, for a term of six months (182 days). Since 600 billion yuan of six-month outright reverse repurchase agreements mature in March, this operation by the PBOC means that the amount of six-month outright reverse repurchase agreements renewed this month has been reduced by 100 billion yuan.US-Israel-Iran Conflict: ① Iran 1. Iran claims simultaneous strikes against four US military bases. 2. Irans Supreme Leader reiterates "will seek reparations from the enemy." 3. Iran claims most of the missiles launched so far were manufactured 10 years ago. 4. US-Israel attacks have damaged over 40,000 civilian facilities in Iran. 5. Iran arrests 13 people suspected of espionage and sabotage. 6. Irans Islamic Revolutionary Guard Corps claims it will "hunt down" Israeli Prime Minister Netanyahu. 7. Iran claims to have launched a large-scale attack on Israeli security centers and police headquarters. 8. Irans Foreign Minister states the end of the war depends on two conditions: ensuring the war never resumes and paying reparations. 9. Irans Foreign Minister: Welcomes any regional initiatives that can justly end the war. Never made a ceasefire or negotiation request. 10. Iranian media: Irans Foreign Minister states that Iran is prepared to form an investigative committee with regional countries to investigate the targets of the attacks. Israel may be behind the attacks on civilian targets in Arab countries. ②United States 1. The US called on multiple countries to send warships to the Middle East, with South Korea, Japan, France, and other countries responding. 2. US media: The US government may announce a multinational joint escort mission in the Strait of Hormuz as early as this week. 3. US Central Command: The Iranian Foreign Minister claimed that the US is using one-way attack drones to attack Gulf countries and shifted the blame to Iran. This is a lie. 4. US Energy Secretary: "Clearly" we will have the support of other countries on the Strait of Hormuz issue. The conflict with Iran will end in the "next few weeks," after which oil supplies will recover and energy prices will fall. ③Israel 1. The Israeli military claimed to have struck an Iranian drone launch site. 2. Israeli media: Iranian missile debris hit the US consulate building in Israel. 3. The Israeli Prime Minister released a video confirming he is still "alive" and said he will continue action against Iran. 4. Israeli military spokesperson: Military action against Iran will continue for at least another three weeks. 5. Israeli Foreign Minister: Israel is not facing a shortage of missile interceptors. 6. Israeli military: Expanding the strike range on Iranian infrastructure in more areas of western and central Iran. 7. According to Israel Today: A senior Israeli official stated that the possibility of overthrowing the Iranian regime is lower than initially estimated. ④ Other 1. Switzerland refused to allow two US military aircraft to fly over its airspace. 2. Bahrains worlds top aluminum smelter initiated a production cut plan. 3. Iraq claims that Baghdad International Airport and its surrounding area were attacked by rockets, injuring four people. 4. The British Prime Minister spoke with the US President, mentioning the importance of reopening the Strait of Hormuz. 5. Iraqi Ministry of Oil: The Kurdish Ministry of Natural Resources currently refuses to resume oil exports. 6. The French Foreign Minister will discuss joint naval operations in the Strait of Hormuz with EU foreign ministers on Monday. 7. Iraqi Ministry of Oil: Ready to resume exports via the Ceyhan pipeline, with daily exports not exceeding 300,000 barrels. 8. Senior Kurdistan government official: Welcomes the use of pipelines for oil exports, but only if the dollar embargo on the region is lifted. Gaza Situation: 1. Gaza medical personnel: An airstrike targeting a police car in the Gaza Strip killed eight people. 2. Israel announced that the Rafah border crossing will reopen in both directions starting March 18. Other developments: 1. The Syrian transitional government has taken over the US military base in Rumailan. 2. Israeli Foreign Minister: Israel does not intend to hold direct talks with the Lebanese government in the coming days. 3. Lebanese Ministry of Health: Since March 2, Israeli attacks on Lebanon have resulted in 850 deaths. 4. According to Israels GLZ radio: Israeli Energy Minister Cohen stated that the government is considering canceling the gas agreement with Lebanon.

USD / JPY Strikes Above 136.20 As Fed Rate Increase Worries Return

Daniel Rogers

Mar 02, 2023 16:07

 

 

The USD / JPY pair is battling in the Asian session to maintain its auction above 136.40, while the downside looks to be supported around 136.00. The asset is expected to continue rising and surpass the 136.40 resistance mark as investors foresee the Federal Reserve (Fed) raising interest rates to strengthen its defense against persistent inflation.

 

Following a down day on Wednesday, S&P500 futures recorded modest gains during the Asian session, signaling a minor improvement in investors' risk appetite. Despite this, the market as a whole is very risk adverse. The spread of the US Dollar Index (DXY) is expected to narrow after a period of chaotic swings.

 

It indicates that the Federal Reserve's (Fed) officials' hawkish stance has revived US Treasury prices.

 

Raphael Bostic, President of the Atlanta Fed, predicted that the central bank would increase the terminal rate to a level of 5.00% to 5.25% in view of the Consumer Price Index's (CPI) enduring nature. The Fed policymaker also thinks the central bank will continue to have a high final rate after 2023. Additionally, Fed Chief Jerome Powell has reaffirmed that an early rate cut could have disastrous consequences for the inflation scenario.

 

It is clear that a future rise in the price index is expected after Wednesday's release of the US ISM Manufacturing PMI. The New Orders Index and Manufacturers' Prices Paid were able to show that the inflation scenario is getting more complicated despite the February PMI figures' failure to wow the market. Figures increased to 47.0 from 43.7 anticipated and 42.5 earlier published, indicating a strong order book. The Manufacturing Price Paid increased to 51.3 from 45.0, as opposed to the average forecast of 45.0, and from 44.5 in the previous report, suggesting that the Producer Price Index (PPI) may soon show a surprise increase.

 

On the Tokyo front, the Japanese Yen is being impacted by a string of dovish remarks from Bank of Japan (BoJ) officials. Following dovish remarks from BoJ Governor-nominee Kazuo Ueda and BoJ Deputy Governor Ryozo Himino, board member Junko Nakagawa also considered the present monetary policy appropriate. "An expansionary strategy is absolutely essential for maintaining the economy and increasing earnings," he said.


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