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Tech investors are being treated to a wild ride in 2022. The Nasdaq 100 Index dropped by 2.2% on Tuesday, the 13th time it has fallen by at least 2% this year. To put that in perspective, that means the tech-heavy gauge has averaged a drop of 2% or more once every five trading days. That would be the highest percentage since the global financial crisis when the benchmark fell by a record 42%.
Source: Bloomberg
U.S. oil output will average 13.1 million barrels per day in 2023 – an increase of about 2 million barrels per day compared to 2021 – according to BloombergNEF’s latest base-case scenario of oil at $105 per barrel.
Oil production growth would have been stronger if not for ongoing capital discipline of the public producers. With OPEC struggling to meet production targets, low global oil stocks and Europe seeking to reduce its reliance on Russian oil, the world will need every barrel of U.S. oil.
Reference: Historical levels of US Oil production
Source: Bloomberg
Joe Biden’s bold plan to take the heat out of the global oil market is making its mark. The U.S. president and allies have announced plans to release a combined 240 million barrels of crude from their strategic petroleum reserves to tame prices that soared after Russia’s invasion of Ukraine, fanning inflation. The initiative has both reduced and compressed key contract spreads right along the futures curve as traders reassess the outlook for supplies this year.
Source: Bloomberg
A bond-market gauge of long-run inflation expectations is still rising, even as the Federal Reserve signals an aggressive path of policy tightening. This week the five-year forward breakeven rate reached its highest since September 2014, according to Bloomberg data. The Fed — which has its own model for the measure that it updates with a lag — uses the reading to help guide policy.
Source: Bloomberg, Federal Reserve Bank of New York
The relative performance of bank stocks and the 10-year U.S. Treasury yield is showing the biggest gap in years. Investors seem to have abandoned the notion of higher rates being good for banks as they consider what a global recession will mean for lending demand and loan loss provisions.
Source: Bloomberg
Another negative is MBB’s four consecutive months of outflows through February. The last time this happened was September 2013. Also, volume is bearish as it has tended to be below average on up days and above average on down days. Negative sentiment has accelerated in this sector of the market as lending becomes increasingly hostile with inflation remaining elevated and real estate deals becoming relatively more expensive.
Source: Bloomberg
MBS 30-year current coupon spreads have historically tightened in response to periods when the Fed grew its MBS portfolio and widened as it allowed the portfolio to taper off.
In this cycle, however, a significant widening occurred as soon as the market started anticipating tapering.
Source: Bloomberg