Headlines:
- Dollar recoups some losses on the day, eyes stay on the Middle East ahead of the weekend
- US stocks with their backs against the wall in the final stretch of the week
- Trump reportedly mulls occupying Kharg Island to force Iran to reopen Strait of Hormuz
- EU leaders make the rare choice of appointing Vujčić as next ECB vice president
- ECB hawk says will need to consider April rate hike if inflation outlook sours further
- ECB policymaker Villeroy: Potential rate hikes will be decided meeting by meeting
Markets:
- Brent crude oil up 0.5% to $108.17, WTI crude oil up 0.3% to $94.93
- CAD leads, JPY lags on the day
- European indices set to end the week lower, S&P 500 futures down 0.3%
- Gold up 0.3% to $4,662, Silver down 1% to $72.20
- US 10-year yields up 1.7 bps to 4.30%
- Bitcoin up 0.3% to $70,701
The Middle East conflict drags on and we're set to head into the weekend expecting the same to continue next week. Headline risks remain paramount but there wasn't too much going on in the session.
The only notable news was a report saying US president Trump might be considering a takeover of Iran's Kharg Island to try and force a reopening of the Strait of Hormuz. It is a risky maneuver if the plan to occupy the island is carried out. So, we'll have to wait and see.
But if anything, it highlights the fact that this war will not really end - at least for markets - until Iran's stranglehold over shipping through the strait is broken.
Oil prices continue to hold higher still but are not acting up too much during the day so far. Brent crude oil is up 0.5% to just above $108 with WTI crude oil up 0.3% to near $95 on the day.
The US dollar also bounced back slightly following the losses yesterday. USD/JPY jumped up to a high of 158.90 but is now settling around 158.55, still up 0.5% on the day. Meanwhile, EUR/USD is down 0.2% to 1.1570 even as ECB policymakers speak out about potential rate hikes to come. ECB hawk Nagel even underscored the potential for a rate hike in April, with markets now pricing in ~58% odds of that happening.
In the equities space, investors continue to grow more nervous. But for a late rebound in Wall Street yesterday, things could've gotten really dicey. And we are starting to see the worries creep in again with US futures down 0.3% and just off lows earlier. The S&P 500 and Nasdaq are eyeing key technical breaks to the downside, so that will be one to watch before the end of the week.
Elsewhere, bond yields continue to nudge higher amid ongoing fears about the inflation outlook. 10-year gilt yields are up to 4.93%, its highest since 2008, while 10-year Treasury yields are also nudging up again to 4.30% on the day.
As for precious metals, the picture is a bit more mixed today with gold up 0.3% to $4,662 and silver down 1% to $72.20 currently. That follows a late rebound yesterday, which came after an intense selling round before that.
It's setting up to be a hectic end to the week, so keep your eyes and ears peeled for more volatility and headline risks abound.
