Tuesday's Market Minute: Rates on the Rise, Crude near 7-Year highs, Geopolitical Tensions, Oh My…

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Looks like another busy week with crude oil prices spiking, U.S. indices in negative territory to begin the holiday-shortened week, and inflation concerns keeping rates on highs for the year. Let’s get into what you should be keeping an eye on and has potential to move markets this week.

First up, some headlines making news: a deadly attack in Abu Dhabi resulted in three oil tankers exploding near the state oil firm Abu Dhabi National Oil Company. The news sent crude prices to near-seven-year highs as the UAE produces 4 million bpd; they are the world’s seventh largest oil producer. Impacting financial markets, we had the Bank of Japan announce plans to leave rates unchanged at -0.10%, but for the first time since 2014 they increased their prices forecasts slightly. They said risks to prices are "generally balanced," a shift from their prior language that risks are "skewed to the downside.” 

Keep an eye on companies reporting quarterly results as last year good news on the earnings front was a big part of what helped investors and traders shrug off the negative news tied to COVID and inflation. Earnings beating expectations allowed them to focus on the positive and remain optimistic. It’ll be key to see if that continues into the first quarter and what impact the omicron variant had on businesses. Big names to keep an eye this week: Goldman Sachs, PNC, Bank of America, Morgan Stanley, Alcoa, United, Netflix, CSX, American Airlines, and the list goes on as this week kicks off earnings into full gear.

We also have some numbers this week to take note of. At the top of the list is the housing data: the Housing Market Index today, Housing Starts and Building Permits tomorrow, Existing Home Sales Thursday. But we also have a 20-yr bond auction, weekly Jobless Claims, EIA Inventories, and Leading Indicators to cap this off on Friday. 

Lastly, the move up in rates has investors taking a step back, and the impact is most apparent when looking at the tech-heavy Nasdaq. The spike in rates, with the 10-year to two-year highs and the 2-year now above 1%, is raising eyebrows and has many doubting some of growth stocks’ ability to hang on to these lofty levels in a higher rate environment. Keep an eye on the TNX; it’s back to 1.8%, and while that’s got some concerned, I think if it got above 2% concern could turn to caution. While the data the past two weeks on the inflation side of the equation has been relatively muted, I think the question many are pondering is with energies prices spiking once again, how long can that remain the case?

Image sourced from Pixabay

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.