James Brodie
Head of Learning & Development, Flux
Financial Markets Breaking, UK Yields Up, Global Trade Disturbance
Markets breaking: yields surge, stocks fall, oil rises; stagflation risk grows as Iran shock hits supply, growth and inflation outlook.
Financial markets are really breaking. Despite Trumps new delay (6th April, 8pm EST), temporary relief turned back to instant pain.
Bond yields are surging higher and equities breaking key support. US 2-year and 10-year yields up 10bp since yesterday morning, while the S&P closed down 1.7% and the Nasdaq down 2.4%. (Chart 1, 2-day chart Brent v 2-year yield, Bloomberg)
Again, the longer the delay the more the energy supply chain breaks, particularly in Asia. Trump is juggling the Iran war with a huge economic shock and financial market meltdown. He has little time, and Iran knows that.
Stocks down, bonds down, gold down, oil up, VIX elevated is classic early-stage stagflation configuration. (Chart 2 S&P 500, Bloomberg)
UK yields now up 1.04% in just 3 weeks. Hold on tight! The UK will suffer a bigger economic hit from the Iran war than any other G-7 nation this year, the OECD has said
Economic forecasts deteriorating rapidly:
Bloomberg Economics: In a scenario where oil hits $170 (strait closed for 3 months) before returning back to $100 by year end, how big is the modelled shock? US inflation +1.6%, US GDP -0.3% UK inflation +1.9%, UK GDP -1.1% EZ inflation +2.0%, EZ GDP -1.2%
ECB's president Lagarde: we are facing a real shock. Lagarde: the shock is probably beyond what we can imagine right now
World Trade Organization chief says the global trade system is facing its most significant disturbance in eight decades.
India imposes export tax on all refineries selling to overseas markets, says Oil Minister.
Polyethylene resin prices rise 200% in China
Australia rare-earth stocks soar as China clamps down on exports
Germany will cap petrol stations to one daily price increase starting in April, per Bloomberg
Another bad US bond auction. 7Y auction has lowest bid to cover since September, biggest tail since 2024
Oracle CDS is about to take out its record global financial crisis print (Chart 4, Bloomberg)
UBS has gated a €400 million European real estate fund for up to 3 years, according to FT.
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