Treasury Yields Continue To Move Higher After Powell Fails To Calm Markets
Yesterday, S&P 500 found itself under pressure while Treasury yields moved higher after Fed Chair Jerome Powell did not signal that the Fed would do anything specific about the recent sell-off in the bond market.
Powell stated that the Fed was monitoring the current situation and that it had tools to support markets if necessary. However, investors clearly wanted to hear more about potential measures to stop the upside trend in Treasury yields.
Meanwhile, rising yields provided additional support to the U.S. dollar which rallied against a broad basket of currencies. Not surprisingly, precious metals were under pressure in such environment. Currently, gold is trying to settle below the $1700 level. If this attempt is successful, shares of gold miners will have a challenging start of today’s trading session.
Oil Tries To Settle Above The $65 Level As OPEC+ Maintains Current Production Cuts
OPEC+ surprised the market as it decided to maintain current production cuts, including Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd). Other OPEC+ members will also keep current production cuts in place although Russia was allowed to increase its production due to seasonal needs.
Most analysts expected that at least 1 million bpd will return to the market in April so OPEC+ decision was not priced in by the market. As a result, WTI oil rallied and is currently trying to settle above the psychologically important $65 level.
I’d note that the recent EIA Weekly Petroleum Status Report indicated that U.S. domestic oil production did not fully recover after the recent blow dealt by cold weather so the current market situation remains bullish.
Unemployment Rate Declines To 6.2%
Non Farm Payrolls report indicated that the U.S. economy added 379,000 jobs in February compared to analyst consensus of 182,000. Meanwhile, Unemployment Rate declined from 6.3% to 6.2% while analysts expected that it would remain unchanged at 6.3%.
Interestingly, S&P 500 futures are losing ground after the release of the better-than-expected employment reports. Perhaps, the market is worried that the economy will get overheated after the new round of stimulus.
For a look at all of today’s economic events, check out our economic calendar.