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Biden Gaffe, Bond Selloff, Shanghai Lockdown - What's Moving Markets

Published 03/28/2022, 06:38 AM
Updated 03/28/2022, 06:44 AM
© Reuters

© Reuters

By Geoffrey Smith 

Investing.com -- The Kremlin digs in after President Joe Biden's gaffe calling for Vladimir Putin's removal from power. Bonds continue to sell off as the yield curve points to a growth slowdown. Tesla (NASDAQ:TSLA) is looking at a stock split while Apple (NASDAQ:AAPL) is reportedly looking at cutting production of some products due to weakening demand. Bitcoin closes in on a new high for the year and oil falls as Shanghai locks down (in stages) for a week. Here's what you need to know in financial markets on Monday, 28th March. 

1. Kremlin digs in after Biden comments; Zelensky talks peace conditions

Hopes for a quick peace in Ukraine took a blow at the weekend after U.S. President Joe Biden called for the removal of Russia’s Vladimir Putin from power. While his comments at the end of a speech in Poland pledging support for Ukraine’s independence were unscripted, they were clearly intentional.

The comments are likely to strengthen suspicions, both in Russia and elsewhere, of a secret U.S. agenda to pursue regime change, although the State Department and the White House both stated later that this is not the case. 

Separately, Ukrainian President Volodymyr Zelensky told independent Russian reporters that he would be willing to accept permanent neutrality as a basis for peace, as long as it was guaranteed by third parties. He also said he would be willing to have separate negotiations about the status of eastern Ukraine and Crimea, removing a further obstacle to peace talks. The Kremlin poured cold water on such suggestions, a spokesman saying that a meeting between the two presidents would be “counter-productive” although it noted that diplomats will resume their meetings in Istanbul on Tuesday.

2. Bond selloff continues, flattening curve further

Two-year U.S. bond yields hit their highest level in nearly three years overnight, as the repricing of Federal Reserve policy moves in response to rampant inflation continued.

The United States 2-Year Treasury yield touched 2.41% before easing to 2.37% by 6 AM ET (10:00 GMT), still up 7 basis points on the day. Ten-year yields however, were largely stable, rising only 1 basis point to 2.50%. As such, the spread between 2- and 10-year yields has narrowed to only 13 basis points, the least since the start of the pandemic. Flatter and/or inverted yield curves typically tend to indicate a growth slowdown in the future. However, their usefulness as a predictor of recessions is often disputed.

Analysts have been falling over themselves to revise their expectations for Fed rate hikes higher after a string of comments last week from Chair Jerome Powell and others warning of the possible need for half-point rises rather than the quarter-point ones previously suggested.

3. Stocks set to open mixed; Apple, Tesla news in focus

U.S. stock markets are poised to open mixed later, with concerns about the rapid selloff in bonds – which will raise capital costs for the economy at large - finally starting to weigh on equity markets that had defied gravity during the rout last week.

By 6:20 AM ET, Dow Jones futures, S&P 500 futures and Nasdaq 100 futures were all effectively flat, after two straight weeks of solid gains. 

Heavyweights look likely to dominate proceedings later, with Apple stock down 1.8% on a report that it will cut production of Air Pods in response to weakening consumer demand, while Tesla stock was up 5% after the electric vehicle maker said it wants to carry out a stock split, which could make the stock more attractive to small investors.

Elsewhere, wholesale inventories data for February are due at 8:30 AM ET.

4. Bitcoin close to 2022 high as BoJ allows yen to weaken

Bitcoin closed in on a new high for 2022, as action from the Bank of Japan revived one of the classic arguments for holding crypto rather than fiat currencies. By 6:20 it was at $47,204, up 6% on the day.

The BoJ intervened heavily in Japanese bond markets overnight, saying it would buy unlimited amounts of bonds over the next four days to keep long-term yields at its policy target rate. As such, the BoJ strengthened suspicions that it prefers to devalue the yen rather than contain inflation. 

The yen hit a six-year low of 125.08 against the dollar as a result of the intervention. The BoJ’s action backs up a string of comments in the last week by BoJ officials that was conspicuously relaxed about the yen’s decline on the FX markets.  

5. Oil falls on Shanghai lockdown

Crude oil prices fell sharply on fears for the trajectory of Chinese demand, as the city of Shanghai announced rolling lockdowns for mass Covid-19 testing over the next week that will affect 25 million people.

By 6:30 AM ET, U.S. crude futures were down 4.2% at $109.11 a barrel, while Brent Futures, the global benchmark, were around $113.03 a barrel, down 3.7%.

The measures will not close the city’s port, or indeed many of its factories (although Tesla’s factory in Shanghai is among those that will stay closed for now). However, the measures, which will be staggered across the city, will ban private car traffic where they are in place.

Latest comments

hipocratic press
War plague famine and ATHs!
not a gaffe but a vstrong statement against a dictator. Putin is a war criminal and ********who jails all who protest. why are Republicans pro Putin. Trump would have handed him Ukraine.
the word you blank out is Murd*r*r? what a crappy biased app.
We are not all the same, and that needs to be respected and harnessed for the strength it produces through democratic practices, not feared and turned into a weapon by despotic rulers who try to use our freedom against us.
NATO certainly has the firepower to turn every russian city, town and hamlet into dust. We don't do it for 2 reasons; a nuclear war is unwinnable, and we believe in the democratic processes, however flawed it is, it's still lightyears ahead of a totalitarian fascist dictatorship
Biden spoke the truth for all of us walking it back was the mistake. F Puketin
Putin is a butcher and the Russian military is comitting blatant war crimes under his pathetic leadership.
Putin should be cleaved from the herd of humanity. He IS a butcher. There was no gaffe. Macron is the one making the mistake. Russian appeasement time is over.
Most americans will see it as the truth, not a Gaff… Maybe Trump will come out of the closet and invite Putin to be his running mate? Probably wouldn’t make a difference to his followers, quite a few have lost the American plot. For those of you who may have forgotten, like Mr. Measows, is democracy, one citizen, one vote.
The CIA has washed your brain son.
- time for you to start thinking for yourself - what is good for Bill? it’s ok, take your time, you will get there…
I loved Trump's speech about Biden... Quite simply true he was..
little cuck trump has never been right about anything in his life
yes, true lies
When Trump was in office, the Left said he was nuts and would start a war! When Biden is in office, the Left says war is good!
- being the same is not a good thing…. it is our differences and our system that accepts those differences that enables us to adapt and become powerful as a nation. Only our enemies, outside and within, would consider our differences a weakness, and they are typically greedy, simpletons, and crooks who have inherited or cheated their ways into power and money. more parties, more checks and balances, not less, is the only way to greater strength and quality of life for all USA citizens.
- it is through championing our differences, not our sameness, that USA gains strength as a nation. China, Russia, Korea, Trump, all single party perspectives, and complete disasters for human rights, dignity, freedom and equality.
Left, Right, up, down, the language of agitators, disruptors, cowards.
Remove the illegitimate not elected POS in the White House!!!!!
m(orons)
Lmao love to see the trump simps so triggered. Does the baby need his safe space??? Whites only is what you need right?
We did that on January
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