Stock futures in the United States recovered some of their losses as investors weighed the impact of a jump in commodity prices on the forecast for inflation and economic growth. Treasury rates increased, but the value of the dollar increased.
500 futures were down 0.2 percent, while Nasdaq 100 futures were down 0.1 percent on Monday. Crude oil rose sharply in response to the potential of an embargo on Russian supply, with Brent crude soaring to $139 a barrel before falling to a level closer to $120. Gas, palladium, and copper prices in Europe reached all-time highs.
Following Russia’s invasion of Ukraine, the Biden administration is examining whether to prohibit the import of Russian oil and energy goods, a move that might exacerbate economic pressures as more corporations withdraw out of the nation in reaction to Moscow’s actions. Ukrainian and Russian officials will meet again for the third round of negotiations later on Monday, but the chances of making any progress are low since Russian President Vladimir Putin has said that Kyiv must accede to his requests if the fighting is to be brought to a close.
The yield on the 10-year Treasury note increased by 6 basis points to 1.79 percent, while the 10-year inflation prediction from the bond market reached a new high of 2.785 percent. For the third day in a row, a barometer of the dollar surged, reaching its highest level since 2020.
Commodities, ranging from cereals to metals, have also seen a rise in price as investors worry about a disruption in raw-material shipments as a result of the invasion and sanctions on Russia, which have turned the former resource giant into a worldwide pariah. Commodity-linked currencies have gained strength.
The world economy was already suffering from high inflation as a result of the epidemic at the time. The Federal Reserve and other major central banks are now faced with the difficult problem of tightening monetary policy in order to keep the cost of living under control but neither disrupting economic growth or causing risky assets to tremble.
The head of Yardeni Research, Ed Yardeni, claimed in a note that the United States is experiencing “stagflation,” which is defined as “persistently higher inflation and less economic growth than was predicted before the conflict.” “For stock investors, we believe that 2022 will continue to be one of the most difficult years of this bull market.”
To prevent defaults from occurring while capital restrictions are in effect, Russian President Vladimir Putin issued an order enabling the government and private businesses to pay international creditors in rubles.
More companies, including streaming behemoth Netflix Inc. and social-media provider TikTok, which is controlled by China-based ByteDance Ltd., have scaled down their activities in Russia.
Meanwhile, China warned the United States against attempting to establish a “Pacific version of NATO,” while declaring that the security disputes over Taiwan and Ukraine were “not comparable at all.”
The Swiss franc, which has traditionally been a haven in times of crisis, has fallen in value versus the dollar after a member of the Swiss National Bank’s governing board said that the bank is prepared to act if the currency’s fast rise continues.