James Brodie
Head of Learning & Development, Flux
Japanese 5-Year Yield Hits Record Highs, Strategic Reserve Release, Fuel Crises
Bonds tumble as inflation surges; energy crisis spreads globally, growth fears rise, markets fragile with hikes then cuts expected.
The bond market was yesterday’s big mover, continuing to implode as inflation expectations ramp higher.
The OIS prices +10bp hikes by year end in the US, +76bp in EZ and +66bp in UK, but it’s the long end that’s now moving more aggressively. But rate hikes will be followed by aggressive cuts as economic growth slumps.
A terrible U.S. 5Y auction with the worst bid to cover in 4 years &highest tail since 2024. Following on from Tuesdays terrible 2Y auction with its biggest tail in 3 years. (Chart 1, US 2-year yield trending higher, Bloomberg)
Japan 2-year yield rises to 1.315% for first time since 1996. Japan 5-Year Yield Rises to 1.74%, Record High Since 2000 Debut
While equities sit on key support (below 200dma) heading towards the weekend. Huge stops below. (Chart 1, S&P 500, Bloomberg)
US core import prices jump sharply (Chart 2, Bloomberg). Feb. import prices +1.3% (vs. est. +0.6%). Export prices +1.5% (vs. est. +0.6%). Annualized: 16.8%–19.6% inflation. That's before the Middle East war. Meanwhile, for the first time in history, the US Postal Service announces an 8% surcharge on all packages to cover rising fuel costs.
International Chamber of Commerce warns of 'worst industrial crisis in living memory' via John Denton
Energy lockdowns are here: -Pakistan -Bangladesh -Sri Lanka -New Zealand -Vietnam -Philippines -Slovenia -Egypt -Kenya -South Africa. Fuel rationing. Travel limits. Reduced workweeks.
Japan released 80 MILLION barrels from strategic reserves, the largest drawdown since they created the system in 1978. covers about 45 days.
India is running out of cooking gas. 90% of their LPG imports go through Hormuz.
Australian PM calls second emergency national cabinet meeting over fuel crisis, as over 500 gas stations in Australia have now run out of fuel as the nation’s fuel crisis worsens.
New Zealand is on track to run out of fuel in about three weeks.
Fertilizer prices are skyrocketing. New Orleans granular urea prices, the most widely used nitrogen fertilizer, are up +89% since December
California diesel breaks record, surpasses $7 a gallon
Ships loaded with LNG and stuck in the middle east are losing product to evaporation- Mitsui O.S.K. lines says.
Volkswagen is in talks with Israel’s Iron Dome maker over a deal that would switch production at one of their factories from cars to missile defence, per FT.
Australia: weekly consumer inflation expectations surge to record 6.9%; consumer confidence drops 5.4 pts to 63.1, lowest since 1973
German Energy Minister Katherina Reiche: our nuclear shutdown "was a huge mistake."
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