Markets were relatively quiet as many European and Asian markets were closed in honor of Easter. Bloomberg reported that volume was about 23% below its 30-day moving average. Equites were led nominally lower by the technologies under the prospect of another rate hike, amplified by the headlines that AAPL reported personal computer shipments fell sharply during the quarter.
It is largely accepted that March’s employment report provided no hurdle for the Fed to increase rates another 25 bps in May, although this week’s inflation data can impact any potential decision. At the time of this writing, the market is suggesting an 80% probability the overnight rate will increase to 5.0% to 5.25% on May 3.
The labor market has remained surprisingly robust despite the cumulative global policy tightening in place. The unexpected is consistently occurring.
Changing topics, it appears most are sanguine regarding geopolitical risks. Will this complacency be shattered as it appears there is danger in many corners of the world?
It is widely accepted, a distracted Executive Branch encourages our adversaries to become more emboldened.
The speed of the collapse of yesterday’s multipolar/interdependent world is frightening. Did yesterday’s economic codependency create an era of peace or is/was this just an illusion? A major issue at hand is many market participants have not lived in a war like setting. Twenty-five to thirty years ago the buzz word was “peace dividend.”
Today a strong argument can be made that trade has been weaponized; the east has weaponized production and the west has weaponized banking and the payment of funds.
The collapse of this world will create an infinite number of possible outcomes, with perhaps the most immediate is higher interest rates, labor and production costs.
What will happen today?
Last night the foreign markets were up. London was up 0.28%, Paris up 0.87% and Frankfurt up 0.51%. China was down 0.05%, Japan up 1.05%, and Hang Seng up 0.76%. Dow and NASDAQ futures are up 0.15% and down 0.15%, respectively ahead of tomorrow’s inflation data. The 10-year is up 5/32 to yield 3.41%.
