OPEC+ Decision On Oil Production Cuts Just Roiled These Already Volatile Assets: What's Going On?

As The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, announced a reduction in oil production by 1.16 million barrels per day beginning May, the impact was visible not just in oil prices but other assets too, when trading commenced in Asia on Monday.

What Happened: The decision certainly comes as a new headache for the Federal Reserve, which appeared to be facing a tough time over the last few weeks, fighting inflation and trying to contain the banking crisis at the same time.

With oil prices rising, the central bank will now have to figure out how much of an impact will this have on the future path of inflation.

Also Read: Best Oil ETFs

As the West Texas Intermediate (WTI) futures expiring in May and Brent futures expiring in June soared over 5% during Monday morning Asian trade, U.S. Treasury notes, the dollar and index futures began reflecting the impact of the surprise move by the organization.

Here's a look at how some of these assets commenced the week:

1. Dollar: The dollar traded higher as inflation concerns once again took precedence following the OPEC+ move. Investors and traders are weighing in the possibility that the Federal Reserve may need to hike interest rates at its next meeting. The dollar index, which measures the strength of the greenback against a basket of six currencies, was last trading at 0.48% higher, at 102.99, having breached the 103 level earlier during the day. It will be worth watching how the Invesco DB US Dollar Index Bullish Fund UUP performs in the coming days.

2. Treasury Yields: Yield on treasuries also climbed following expectations of rate hike by the Federal Reserve. The two-year treasury yield, which usually moves in line with interest rate expectations, rose 5 basis points to 4.11% at the time of writing. The yield on 10-year treasury notes was up 2.9 basis points at 3.519%. The Vanguard Total Bond Market Index Fund ETF BND had closed 0.52% higher on Friday.

3. Index Futures: U.S. index futures, too, took a hit following the news. The Nasdaq 100 futures were trading 0.64% lower while the S&P 500 futures lost 0.32% in morning trade. The SPDR S&P 500 ETF Trust SPY and the Invesco QQQ Trust Series 1 QQQ are expected to witness volatility this week following last week's positive momentum.