The global bond and equity markets fell as oil prices rose by 3% on average in the U.S.
The bond and equity markets in the United States fell sharply on Monday following disappointing and alarming Chinese economic data. As it seems, the spread of COVID cases and the lockdown in China have affected several sectors in the country. causing a poor and disappointing performance in retail and manufacturing activities.
The global bond market had plummeted, including the benchmark 10-year Treasury yields, which had fallen by 0.37% as of Monday morning.
The supply chain shortage has turned out to be a very complex and troubling issue for global stocks generally and U.S. manufacturing activities specifically. As of May, US factories had failed to deliver on time for the third month in a row, beginning in March 2022. The Chinese lockdown had resulted in some supply shipment disruptions, putting additional strain on global manufacturing and retail activities.
This morning, the S&P 500 fell back to begin the seventh week of losses, while the Nasdaq fell by 1.30% and the Dow rose by 0.2%.
As for the macroeconomic outlook, it’s unclear how the market will react in the next quarter or three quarters. The U.S. market is now affected by the Chinese problem, which has turned out to be a huge issue and is threatened by the West European war.
In the early weeks of the West European war, oil and energy prices rose, and since then, oil prices have fluctuated between falling and rising.
Today, the OPEC effort to increase oil prices turned positive, recording an increase of 3% on average. West Texas Intermediate oil rose by 3.31% to $114.1 per barrel. Brent oil in the United Kingdom rose 2.54% to $114.28 per barrel.
In the U.S, natural gas jumped by 4.29% to $8, gasoline increased by 1.46% to $4.017, while heating oil fell by 0.33% to $3.912.
On average, all OPEC members increased their daily oil prices by 2%-3% today. That may resolve this pricing problem. As for their strategy, OPEC members noted in previous comments that consumer problems will remain consumer problems till the prices cool down and settle back at their normal levels. Till now, this strategy has turned out to be very effective. However, the Western war might affect the energy sectors in the future.
For now, the bright outlook goes for the US dollar while it remains a positive investment, even though it has fallen today after reaching its 20-year high.
Keeping with the economic outlook, economists think that the Federal Reserve’s efforts to fight inflation are worthless in some ways. The federal government might confess that interest hikes might hurt their economy more than cure it.
By the end of 2022, there will be a total of 7 hikes, or 9 interesting hikes. According to experts, a 7-9 interest rate hike at an aggressive level will harm the US market in the long run.
The labor force and the housing market will be the first to suffer, and the damage will spread to other sectors.
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