U.S. Treasury bonds and the stock market are rising simultaneously, with MBS spreads outperforming, hinting at underlying stagflation dynamics.
- MBS basis outperformed the broader market, the US Treasury yield curve showed a clear bull flattening, and US stock futures opened higher. Despite WTI crude oil prices breaking above the $100 mark, bond and equity volatility remained at relatively high levels, marking the end of a terrible first quarter on Tuesday.
- Market trends are mainly influenced by the ongoing conflict between the US, Israel, and Iran, which began on February 28 and has now entered its second month. Trump warned on social media that if no agreement is reached in the short term and the Strait of Hormuz is not immediately reopened, Iran’s power plants, oil wells, and Kharg Island will be destroyed.
- Overseas data reflect the impact of war shocks and soaring oil prices: in the Eurozone, the Economic Sentiment Index fell to 96.6 in March from 98.2, while the Consumer Inflation Expectations Index jumped to 43.4 from 26.2; Germany’s March preliminary CPI rose to 2.8% year-on-year, significantly higher than February’s 2.0%.
- The US data calendar is becoming busier this week, with the March non-farm payroll report set to be released on Friday, becoming the market’s focus. On Tuesday, Federal Reserve Chair Powell will participate in an economics classroom discussion at Harvard University, and his comments on the economic outlook and interest rate path are highly anticipated.
- As of Tuesday morning, the 10-year US Treasury yield stood at 4.378% and the 5-year at 4.012%. Volatility indicators show that the market remains cautious. WTI crude oil rose to $100.93 per barrel, while the US Dollar Index and gold moved higher simultaneously, with geopolitical risks and growth concerns continuing to be intertwined.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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