Weekly Market Recap – April 18th

The material in each presentation has been prepared by the respective participant for informational purposes only, and does not, nor does it intend to, provide tax, legal, accounting, or investment advice. This information is of a general nature and does not address the circumstances of any particular individual or entity. You should consult a qualified advisor on your situation to answer specific questions.

Signs of U.S. Gasoline Demand Erosion

A recent survey by American Autos Association indicates that 59% of American drivers would change their lifestyle or habits if gasoline costs more than $4 per gallon at the pump. U.S. gasoline prices have been averaging above $4 since early-March. Signs of demand destruction can be seen at these gasoline price levels. The most recent data shows that gasoline product supplied for the U.S. – a proxy for gasoline demand – slipped below 2021 levels for three weeks in a row.

Fuente: Bloomberg

Money Managers Cut Back on Oil Bets

Hedge funds dumped bullish positions on Brent oil futures for a third straight week, according to the latest available data from ICE Futures Europe. Money managers sold a net 3,277 futures contracts in the week ended April 12, trimming the total to the lowest level since November 2020. The exodus comes as volatility reigns in oil markets, with crude swinging in extreme weekly moves as traders weigh Russia’s war in Ukraine, the release of strategic petroleum reserves and a virus resurgence in China that may dampen global demand.

Fuente: Bloomberg

Treasuries Face Their Worst Market in Years

Long-maturity Treasuries are contending with their biggest drawdown on record, at least according to their most popular exchange-traded fund. BlackRock’s $19 billion iShares 20+ Year Treasury Bond ETF has fallen almost a third from an all-time high in August 2020. Such U.S. debt has been at the forefront of a global fixed-income selloff as the Federal Reserve signals it will raise rates swiftly to tame inflation.

Fuente: Bloomberg

Checking Prices at the Factory

Companies in the world’s second and third largest economies continue to face high-cost pressure from the global surge in commodity costs including oil. In Japan, the producer price index climbed at a faster-than-expected pace of 9.5% in March from a year ago while February data was revised up to 9.7%, for the biggest gain since 1980. Despite the elevated gains, consumer prices are rising at a much slower pace both in China and Japan, enabling their central banks to maintain a dovish policy stance for now to support growth rather than tame inflation.

Fuente: Bloomberg

Monitoring the opening of Earnings Season

This earnings season marks a pivotal moment for investors and companies alike. With this season’s results, new business models will be tested under the new inflation regime as well as new pressures from the labor market. Analyst will see which companies can maintain their competitive edge during a less favorable business environment.

Financials have started earnings seasons on a bad note as slowdown in economic activity and muted activity in equity markets have dented top-line and earnings growth for the quarter.

Fuente: Bloomberg