ndx

Equities still look rich relative to where they could go in a genuine shock where the Fed is not able to cut interest rates. Valuations are too high for an environment of persistent inflation and constrained central bank response.

wti

We could get $125, $130 a barrel oil very easily if this continues to unfold in a scale that is measured in months, not weeks as it was originally intended. The market mispriced the conflict as short-term; the nature is a persistent supply shock.

metals

wti

Longer disruption will cause financial prices to embed more risk and go higher. The paper market is under-pricing the duration risk from infrastructure damage. Escalation increases the probability of a prolonged event.

ndx

With that comes a technology trade... when you're going through tough times, particularly from a macro perspective, tech is relatively macro-agnostic asset class... that's where investors will be focusing on in moments of difficulty. Sees US tech as a relative safe haven and beneficiary of a flight to quality/resilience within the US market during the shock.

wti

We would certainly assume at this point in a time that oil prices... will stay fairly elevated through the rest of the year even if the conflict comes to an end in the next few days. The shift in dynamic where Iran, not the US, can call the shots means supply disruption risks are more persistent.

dxy

The dollar has really not lost its role in times of turmoil... We do think the dollar will continue to be the global reserve currency. His view is one of stability and maintained status, not a strong directional call up or down.

wti

Oil futures price of oil about a year out is around $70 a barrel not $100... oil investors seem to think this is going to end pretty quickly. Clarida cites futures market pricing, which suggests the market expects a reversion from current spike, implying a sideways-to-lower medium-term direction from current highs.

metals

gold futures continue in a cell off... you're going to see that they're going to be buying less gold in the future... gold, gold miners, silver, silver miners, all being sold off at the same time. High energy prices create a stagflationary shock, forcing the Fed to hold rates, which hurts growth-sensitive commodities. Capital is shifting from store-of-value metals to securing physical energy needs, removing a key structural buyer (central banks).

wti

the US oil is hanging in right at this 95 mark right between 95 and a hundred dollars Conflict-driven supply disruptions and attacks on energy infrastructure are creating upward price pressure and volatility, particularly in Brent, which spills over into the oil complex.

yields

The interviewee states the Fed 'cannot cut rates' and is 'tightening things up' due to high energy prices and inflation. This implies a hawkish hold or potential for further tightening, which would keep yields elevated or push them higher in the short term.

dxy

It's put a short term bit for the US dollar. He directly states the conflict provides a short-term bid for the USD.

metals

I believe gold has entered a consolidation period... I view gold as in a trading range between 4-5 and 5-5. And I think that may extend for a period. He cites gold not making a new high on the conflict outbreak as a signal it has peaked for now.

yields

As long as the Treasury bond market remains well behaved... for now, the ten year has been relatively well behaved. He states the Fed won't be forced to tighten if the Treasury market stays well-behaved, indicating an expectation of stability in the near term.

wti

There is no policy response that can stop this ascent and crude none. Multiple supply chain disruptions across energy complex; SPR releases insufficient to offset ~18M bpd disruption; hoarding behavior adds 2-3M bpd demand pressure; damage will take months to unwind.

metals

gold market, it's down about $330... Gold Futures continuing to sell off... gold, gold miners, silver, silver miners all being sold off Central banks shifting from gold to energy security purchases; high energy costs hurting mining profitability; gold lost safe-haven status becoming growth story; structural support removed

wti

US oil is hanging in right at this 95 mark right between 95 and 100 dollars Geopolitical attacks on Middle East infrastructure causing price shocks; Strait of Hormuz disruption (20% of global energy) supporting prices; no progress on conflict resolution suggests continued pressure

yields

Fed can't cut rates with energy prices/inflation high; 'higher for longer' scenario; only if oil prices come down would '10-year Treasury yields will come off'

wti

chances are that as this continue to drag on, then the... a medium to longer-term oil price expectations will start to change as well. Explicitly states that the prevailing expectation of a quick oil price drop is wrong and that medium-term price expectations will rise due to the protracted conflict and supply damage.

wti

The size of this oil shock is unprecedented. The Strait of Hormuz has not been closed before. 20% of oil production. That is very material. Describing the shock as 'unprecedented' and 'very material' directly references the cause of the sharp price increase.

wti

market's starting to reprise maybe a higher for longer scenario Futures curve backwardation with longer-dated contracts drifting higher indicates repricing.

yields

I think the next move will be a hike Based on view that last cut is done, ECB is hiking, and Fed will follow if economy rebounds.

wti

You get long, buckle your seat belt and hang on for the ride... the upside here, I would argue, is substantial. Again, we want to be long... We haven't even really started the rebalancing process yet. Argues the current ~$100 paper price is massively disconnected from physical markets (~$130-$170). Uses the mirror of COVID's -$37 rebalancing price to imply a need for very high prices to destroy demand. Points to physical prices (Oman $173, jet fuel $220-$230) as a leading indicator. Sees no spare capacity and a supply shock equal to COVID's demand shock.

wti

In the near term, higher energy prices will push up overall inflation... the substantial rise in oil prices caused by the supply disruptions in the Middle East. Powell explicitly confirms a substantial, near-term rise in oil prices due to Middle East supply disruptions, characterizing it as a shock that will push up inflation.

yields

Higher energy prices will push up overall inflation... We are well positioned to determine the extent and timing of additional adjustments to our policy rate based on the incoming data, the evolving outlook, and the balance of risks. Powell explicitly states higher energy prices are inflationary and the Fed is watching the data closely. With inflation already elevated and risks to the upside, the implicit direction is for potential upward pressure on yields if the inflation shock persists, though the Fed is not pre-committing.

wti

substantial rise in oil prices caused by the supply disruptions in the Middle East

yields

Committee decided to maintain the target range for the federal funds rate at 3.5 to 3.75 percent. Fed maintaining current policy rate suggests yields will remain stable in near term; no indication of imminent rate changes despite inflation concerns.

wti

Near-term measures of inflation expectations have risen in recent weeks, likely reflecting the substantial rise in oil prices caused by the supply disruptions in the Middle East. The Fed explicitly cites a 'substantial rise in oil prices' as a current factor, attributing it to Middle East supply disruptions. This is a direct observation of a price increase that has already occurred and is impacting near-term inflation expectations.

yields

The median participant projects that the appropriate level of the federal funds rate will be 3.4% at the end of this year and 3.1% at the end of next year. Projected policy rate cuts imply lower short-term yields. The Fed's commitment to bringing inflation down suggests a dovish tilt, which would put downward pressure on the longer end of the yield curve over the medium term.

dxy

It's put a short term bid for the US dollar. Middle East conflict seen as short-term relative positive for US, attracting dollar flows.

metals

I believe gold has entered a consolidation period... I view gold as in a trading range between 4.5 and 5.5. Gold did not make new high on conflict outbreak; gold miners also consolidating due to higher energy costs.

wti

if we stay at these oil prices... $120 a barrel Describing current price level and its implications suggests expectation of sustained high prices for next several months.

wti

We could get $125, $130 barrel oil very easily if this continues to unfold in a scale that is measured in months, not weeks. Middle East uncertainty playing through to energy sector could drive substantial oil price increases over medium term.

yields

10-year yields are below 4% by the end of the year. Lower rates remains my base case. Long term bullish for treasuries. Flatter curve makes sense with 10-30yr outperforming. If Fed fights inflation/delays cuts, breakevens compress and nominal rates slip lower. Geopolitical uncertainty and potential consumer stress undermine growth.

wti

Right now, what's happening in the Middle East is one or two order of magnitude larger... the price of brent basically doubled... the largest supply event in the oil and gas market that I have seen in my career. Explicitly characterizes the situation as an unprecedented supply shock causing a sharp, sustained price increase.

yields

The front end is pricing in the lack of cuts... It's hard to see the two-year rise meaningfully unless we think inflation is going to stay high for many many years. Front-end yields are up because the oil shock prevents Fed cuts. However, a sharp, sustained rise is constrained by longer-term inflation expectations still being sub-3%.

wti

So I think you're at $100 a barrel. This thing's mispriced. [...] this rest of the complex likely to start to riot rally. Currie argues the physical market is trading at $130-170/bbl for Asian crude with products above $200/bbl, while paper WTI is around $100. The closure of the gap between cheap Russian crude and high-cost WTI/Brent has eliminated spare barrels. He equates the current supply shock to the COVID demand shock, which severely disrupted global supply chains, implying a sharp upward correction is imminent.

dxy

Dollar is overvalued... if the Fed cuts and ECB is on hold... dollar will continue to go down... We are positioned for that.

yields

We bought recently quite a lot of two-year data bonds... market is too extreme pricing hikes in particular in Europe. His action of buying short-dated European bonds indicates he expects yields to fall as the market is overpricing rate hikes, especially with the ECB likely on hold and growth softer.

wti

We're in the midst of an oil shock... We don't know if it's going to dissipate from here on out or get bigger... It could go up, could go down. Blinder explicitly refuses to forecast a direction, emphasizing equal probability of up or down moves due to the uncertain geopolitical situation, which he states won't be over soon. This defines a sideways/volatile outlook, not a directional 'cautious up'.

wti

WTI, I believe is what... 98 and change now. So we're very similar, or we're back to similar levels that we saw just a week ago before. The bit of a pullback. Oil spike driven by Iran threat; prices jumped 50-60% recently.

wti

Our commodities team is forecasting with a baseline assumption of 21 days closure of the Strait of Hormuz... which takes the oil numbers towards 85 in April and thereafter lower into the 70s by the end of the year. The forecast implies oil prices are currently elevated (above $100) due to the conflict and supply disruption, with a path downward only after a gradual reopening of the Strait. This indicates an 'up' direction in the short term from a pre-conflict baseline, followed by a decline.

wti

Prudely oil prices are up 42% year over year Oil price surge is feeding into services inflation; conflict needs to subside for Fed cuts.

yields

A 30 basis points higher on core inflation... is probably good for enough of them to take a rate cut off the table. His core argument is that sticky, above-target inflation will force the Fed to be more hawkish in its projections, removing expected rate cuts, which should put upward pressure on yields.

wti

Energy prices moving higher are inflationary in the short-term Acknowledges oil moving higher due to conflict; short-term inflationary impact.

dxy

we have the the dollar down Stated as an observed market move on the day, part of the 'opposite direction' pattern.

wti

We've got oil prices up Mentioned as part of the day's price action, in contrast to the typical war-period inverse relationship with equities.

yields

we have bond yields down Stated as an observed market move on the day, part of the 'opposite direction' pattern.

dxy

if we get oil prices start break down, we'll see the dollar index should break down Directly stated correlation with oil price movement.

yields

if we get oil prices start break down, we'll see the dollar index should break down and yields will break down as well Linked to oil price movement - if oil breaks down, yields break down, raising rate cut expectations.

metals

We still see the political and economic environment being supportive of higher prices later... longer term we still think that civil prices have further to go Economic and political factors driving investment demand have worsened, not improved; any short-term dips expected to be buying opportunities.

wti

we are seeing oil move to the upside Due to supply disruptions from strikes on UAE port and gas fields, with focus on refining/production infrastructure over next couple weeks.

dxy

You're seeing it in the rally in the dollar Flight to safety/quality is driving dollar strength

ndx

You're also seeing it in the recent out performance of tech Investors returning to tech due to long-term structural fundamentals, earnings growth, and upgrades

wti

expectations for energy prices are to recover and be back around $80 in the not-too-distant future

metals

Gold not safe haven – speculative asset. Source of funds when risk aversion. In stagflation you get higher yields – toxic for equities, long duration bonds, and gold.

wti

Oil at 100-110 starts to squeeze profit margins or consumption. At these levels with further supply disruptions, risk goes higher.

yields

Long-term people too complacent – populism, nationalism, trade wars, wars fuel spending, very inflationary. 10-year break-evens way too low.

dxy

dollar strength Mentions dollar strength as part of the market's immediate focus on inflationary risks/hawkish Fed tilt.

wti

if you take a look at futures markets out a year, it's saying that all but $10 of this oil price rise is going to be erased Cites futures market pricing to argue the current oil price spike is temporary.

yields

the Federal Reserve would be easing and they'd be easing very significantly... the Fed would be cutting hard Based on his forecast of a weakening labor market leading to recession, to which the Fed will react.

wti

once the conflict settles. I think oil prices move back down. View that Middle East conflict is a temporary disruption; once settled, focus returns to fundamentals (strong earnings, falling inflation) which don't support sustained high oil prices.

wti

if we are still in the same place in May, looking into a third quarter, I've already mentioned we could see spikes 160 or as a barrel, if things keep going we can see Brent breaking 200 gs of barrel The Strait of Hormuz closure lacks viable rerouting alternatives, creating immediate supply disruption risks. Without resolution in weeks, the situation becomes 'very, very complicated for oil prices,' with potential for dramatic spikes as recession risks escalate.

metals

Buyer of gold dip under $5000/oz. Gold does start to recover once central banks begin to react to the impact on global growth. Sees gold pressured short-term by rate hike expectations and strong dollar, but recovery likely as growth impact becomes focus.

wti

We have not yet seen the peak of oil prices. Clearly, the next two weeks is extremely vital. Base case $90 by June if Strait reopens, but currently disrupted. Prices could stabilize around $90-$100.

wti

even if this was to end right away, you're probably gonna have spillover effects to things like food and transportation. It's gonna take some time before the oil would start flowing in a more regular way. Explicitly states that oil supply disruptions will persist for some time, leading to higher prices (spillover effects) in the near term.

wti

you probably don't get some real good durable low in equities until you get crude back into the 75 to 85 range Current price at $96.05 implies oil needs to come down significantly for equity lows

wti

how much energy prices will stay elevated Conflict duration key for energy prices; expects if limited duration (wrap up by April), jump won't last. But currently elevated and could persist if drags on.

wti

At some point... price is going to have to solve the supply demand equation. And that price isn't where we're at today with WTI near 100. It's going to be 20 or 30% higher. His entire analysis is based on a severe physical supply shock (15% of global supply offline) that cannot be worked around, necessitating a sharp price increase to destroy demand.

wti

Maybe it won't be a 20% cut in global oil as a result of the Persian Gulf War but more like 10%. He explicitly references a potential supply cut (10%) due to the conflict, which is a direct driver for higher oil prices in the short term.

wti

Futures markets have them going down into the 60s again by the fall... It goes all the way down to the 50s past the year... We're moving towards a world where the energy of the Middle East is accessible through free markets without extortion... that's going to drive oil prices down in the long run. Hassett believes ending Iranian terrorism and creating Middle East stability will reduce risk premiums and increase investment, leading to lower long-term oil prices.

dxy

that should keep the dollar somewhat supported over the short run Cites the dollar's reserve status, ongoing demand for Treasuries, and elevated US yields as supporting factors, despite acknowledging a potential marginal waning in demand.

yields

the 10 year treasuries up 25, 30 basis points over the past few weeks... if US yields kind of stay elevated Mentions recent rise in yields and discusses factors (Fed outlook, inflation expectations) that could keep them elevated.

yields

it is possible the next move will appropriately be a hike Due to uncomfortably high upside inflation risks from the Iran war shock, though timing is uncertain.

yields

HSBC expects no Fed cuts this year - taking extreme view. Explicit no-cuts view combined with concern about oil price inflation suggests yields may remain elevated or rise.

metals

We have been pushing commodity as an interesting space to be in... That drives commodity price high... All of these perspectives gives you a long commodity lens.