Mid-Week Market Minute 03.16.22

Global stocks traded marginally higher this week as investors continue to assess the impacts of developments in Eastern Europe. Fears over persistently higher energy prices were somewhat alleviated as oil prices fell below $100 for the first time since last February as the latest wave of the COVID pandemic in China tempered the outlook for global energy demand.

On the data front, the Producer Price Index increased by 0.8% in February, with core measures rising at the slowest pace since late 2020. Year-over-year, producer prices have risen 10%, approximately in line with consensus expectations. Meanwhile, the Federal Reserve’s two-day policy meeting concludes on Wednesday. For the first time since 2018, the market is largely anticipating the Fed will raise the benchmark interest rate by 25bps to help rein in inflation and put an end to the last two years of extraordinarily easy monetary policy. Given recent developments in Eastern Europe and the potential for future lockdowns in China, policymakers are facing several unique issues that did not exist just a few months back. Investors will be focused on forward guidance from the Fed, which is expected to forecast as many as six more quarter-point rate hikes between now and the end of the year. Ahead of the announcement, interest rates climbed higher, with the yield on the 10-year US Treasury note trading around 2.16% mid-week.

Source: GSAM, Daily Upside, JPM, FactSet

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