WTI crude looks set to settle below $100 on the week and from the charts, we are seeing a semblance of a double bottom just below the $94 mark:

That will be an important level to watch before a potential drop towards $90 next. Recent sentiment hasn’t been too kind for the oil market outlook, even if OPEC+ is not going to mess things up. Let’s take stock of the situation.

China lockdowns, geopolitical tensions continue to threaten a further slowdown in the global economy
Rising inflation pressures are also weighing on the consumption outlook
Reserve releases by the US and IEA have led to a narrowing in backwardation spreads i.e. less worries about near-term availability of oil supply

So, while global inventories continue to look rather tight, the factors above are working against oil prices at the moment. There is good reason to expect a pullback but I would say that the main argument still holds. That being the first two factors are things that will pass eventually and the final factor is one that is only a temporary fix. Reserve releases do not help to restore the structural imbalances in the oil market.
As such, I would still side with the view that oil prices are going to stay elevated barring any destruction demand or a crash on recession fears. If there is a scenario like the latter, it would make for a perfect dip buying opportunity. Otherwise, any further pullbacks will also be attractive to scale more into longs in my view.
A push towards $90 may draw in some buyers but I think around the levels of $80 to $85, that is where we will see stronger plays from oil bulls in securing longer-term positions. At least I know I will.

Aims are being achieved and work carried out by military, peace negotiationsRussia continues to be adamant that things are going „on course“ for them. But then again, it is the kind of rhetoric that you have to expect from their side otherwise the alternative would be a sign of weakness.

This was already coming since the start of the week, so it isn’t anything new. The full announcement can be found here.The coal import ban is delayed to August 2022 as mentioned here but it is a start at least. It remains to be seen if the EU will have appetite to go after oil and gas but Germany certainly will be a key stumbling block once again if so.

Monetary policy stance remained very accommodativeLarge number of members held the view that current level of high inflation called for immediate further steps towards policy normalisationIt was argued, that for all practical purposes, three forward guidance conditions have been metA longer period of above-target inflation would lead to increased risk on upward de-anchoringIn such a circumstance, ECB could no longer afford to look through higher inflationThe view was taken that APP purchases had by now fulfilled its stated objectiveNonetheless, it is seen as wise to keep some two-sided optionality on policyFull accountThere are some hawkish mumblings based on the remarks above but recent ECB commentary does not suggest that policymakers are too keen to push the agenda. So, that is making things a bit confusing in my view. I wouldn’t say a lot has happened over the course of the past four weeks but it certainly has perhaps.If the ECB thought that rate hikes could do them some good, they definitely do not share as strongly a view on that now.

Headlines:Bond selloff takes a breather for the time beingEU full ban on Russian coal reportedly to be pushed back to mid-AugustTechnical issues stall EU’s attempt to ban Russian coal but the path forward is evidentJapan to release 15 million barrels of oil as part of IEA-led coordinated releaseChina reaffirms that it opposes all forms of official interactions between US and TaiwanPelosi visit to Taiwan stirs up US-China tensionsBOJ’s Noguchi: Merits of a weak yen on the economy outweighs the demeritsEurozone February retail sales +0.3% vs +0.6% m/m expectedUK March Halifax house prices +1.4% vs +0.5% m/m priorGermany February industrial output +0.2% vs 0.0% m/m expectedMarkets:GBP leads, AUD lags on the dayEuropean equities higher; S&P 500 futures up 0.2%US 10-year yields down 1.3 bps to 2.596%Gold up 0.1% to $1,928.30WTI up 1.5% to $97.63Bitcoin down 0.9% to $43,505Headlines were few and far between on the session as markets settled down on the week, with the bond market selloff cooling and equities finding a bit of a breather after two days of modest declines.Treasury yields are keeping lower while European indices are posting decent gains with S&P 500 futures also seen up 0.2%.If anything else, it just points to a bit of a pause in the recent momentum as the focus stays on the battle between central banks and inflation for the most part.In FX, the dollar was choppy but is now keeping little changed overall with EUR/USD moving down to 1.0865 from 1.0930 before sticking around 1.0890 levels at the moment.USD/JPY is little changed as the pair continues to trade sideways between 123.50 and 124.00 since yesterday.The aussie and the kiwi are laggards with the former stuck around 0.7475-90 against the dollar throughout the session.Fed speakers will be something to watch later on in the day, so keep your eyes and ears peeled in case.

The Merge, the most expensive NFT in the world created by digital artist Pak was sold for $91.8 million USD as nearly 30.000 NFT collectors rushed to get in on the action. And while these numbers leave many in shock and awe, the NFT craze is still far from being over. In fact, did you know that by simply owning an NFT you could be making passive income? There are many ways of having exposure to NFTs, so let’s dig in. What is an NFT? To put it in simple terms, NFT stands for Non-Fungible Token, which is cheeky way of saying that it is a completely unique token that is unable to be duplicated. Now, the version of NFTs which people are familiar with are jpegs, however, it is important to make the distinction that the NFT itself isn’t just the picture you are looking at, rather a token ID on the blockchain which is paired with the image URL and therefore represents the image you are looking at. This means that since there is no image data on the blockchain, what the token is doing is simply pointing to the image file, meaning that it could also point to several other different things such as domain names, the deed to someone’s house, and so forth, which is why they are extremely versatile and likely to revolutionize the very concept of ownership. Investing in NFTs directly While some take an active stance and speculate wildly on NFT markets, trading them much like NFT stocks, passive income is in fact possible too. So, yes, those avatars and cat jpegs and other NFT art might earn you a considerable amount of money if used right. Investing in NFT stocks If you aren’t an artist and find NFT markets confusing, there is another way you can gain NFT exposure: through NFT Stocks. Many companies out there have dwelled into NFTs, either by operating in their marketplace or selling them. Big names include Coinbase Global, Inc (COIN), Draftkings Inc. (DKNG) a sports betting and fantasy sports company, Chiliz (CHZ), and eBay Inc, (EBAY). Role of Blockchain stocks There are many publicly traded companies out there which incorporate blockchain tech into their operations, whether its directly or through the offering of blockchain-related services. Others simply play a role in the crypto industry either by focusing on crypto or fostering blockchain innovation. Some of the most established blockchain stocks are: Nvidia (NVDA), the leading manufacturer of GPUs and graphics cards, Block (SQ), previously known as Square, Mastercard (MA), and IBM (IBM). Where does passive income NFTs fit in? If speculative NFTs stock trading sounds like a FOMO-induced proposition, but there are clever new ways one can earn a steady stream of revenue from other NFT applications. Much like content can be monetized online, content makers can also make NFTs of their works and sell them with the promise that whoever will buy them will get a part of their advertising revenue. The core idea of a passive income NFTs is the notion that having a digital representation of physical asset adds value. As an example, let’s look at the entertainment industry. If an up-and-coming new band is about to release a new hit song they can monetize it on a popular streaming platform, meaning that they will earn a percentage every time someone buys it or streams it (via ads). However, if the artists decide to go on a tangent from traditional means, they can simply turn that song into an NFT and sell part of those monetary rights for a period (or in perpetuity), so the owner of the NFT would also receive his or her cut. This allows for the artists’ audience and fans to engage with the band, to have their skin in the game by investing in their project, and, more importantly, to earn rewards along the way. NFT monetization Accordingly, this logic makes it so that the concept of NFT monetization can be extrapolated into other areas such as social networks or video with creators on Youtube, Vimeo, Odysee or any other platform from the blogosphere, social influencers, and so forth. Consequently, investors can back the creators’ projects in a new and unique way and earn their fair share passively. Real life NFTs and their “leakage” into the real world seems inevitable, and even for those who are short on capital, there is ample opportunity for investment and a consistent, long-term stream of revenue. You just got to play your cards right.

2-year Treasury yields -6.7 bps to 2.435%
5-year Treasury yields -5.4 bps to 2.649%
10-year Treasury yields -2.8 bps to 2.581%
30-year Treasury yields -1.1 bps to 2.621%

That might be what is offering some respite to stocks, which are hoping to snap quite a modest two-day decline. European equities holding higher with US futures also up around 0.3% at the moment.
I’m not going to attribute much to the drop in bond yields today as it comes on the back of a four-day climb in Treasuries.
In the FX space, the dollar is mostly calmer in a bit of a choppy session but mostly holding little changed. The aussie and kiwi are the notable laggards but have kept near the lows for the day since Asia trading already.

Fiscal
policy is the use of government spending and tax policies to influence economic
conditions. Like the central bank, the government can pursue an expansionary or
contractionary fiscal policy.

 

When the
economy is weak the government can lower taxes to encourage people to spend or
invest because their disposable income (income minus taxes) increases making
them feel wealthier.

 

This can
help demand to grow making businesses to hire workers and causing even more
demand as people start to see a better environment eventually helping the
overall economy. The government can also increase spending like for example for
infrastructure that increases employment pushing up demand and overall growth.

Such expansionary
fiscal policy is associated with deficit spending. This means that the
government spends more than it earns through taxes and borrows the rest from
the open market selling bonds. This eventually creates debt that will need to
be repaid in the future.

 

On the other
hand, when the economy is strong the government can increase taxes and lower
spending therefore slowing down demand and growth. Unfortunately,
contractionary fiscal policy is rarely used because it’s politically unpopular
as people most likely wouldn’t want to vote for a government that raises taxes.
This is one of the reasons why government debt eventually grows gradually.

 

Generally,
it’s the central bank that pursues a contractionary monetary policy to slow
demand and growth and that’s also why an independent central bank is vital as
it’s not aiming for political approval but just to make sure the economy
remains stable.

 

This article
was written by Giuseppe Dellamotta.

Headlines:The bond market rout remains unrelentingChina state refiners reportedly staying away from new Russian oil tradesECB’s Lane: Important not to overreact to inflation surgeECB’s Panetta: Policy action now against inflation risks crashing the economyRBA’s Bullock: Expect some upward revision to our inflation forecastsRBA’s Kent: Some other forces likely to push inflation higher stillUS MBA mortgage applications w.e. 1 April -6.3% vs -6.8% priorEurozone February PPI +1.1% vs +1.3% m/m expectedGermany February factory orders -2.2% vs -0.2% m/m expectedMarkets:EUR leads, CHF lags on the dayEuropean equities lower; S&P 500 futures down 0.9%US 10-year yields up 7.4 bps to 2.627%Gold down 0.1% to $1,921.20WTI up 1.6% to $103.60Bitcoin down 2.1% to $44,910It was a quiet session for the most part but there were some decent moves in the market as we continue to see the bond selloff deepen. Meanwhile, equities tracked lower as stocks remain on the defensive after more hawkish Fed talk from Brainard yesterday.European indices are down by nearly 2% across the board with US futures also sinking further by roughly 1%.The moves didn’t quite translate into any meaningful action in FX though. Major currencies remain in a rather push and pull mood with the dollar seeing a slight advance early on only to give that all back to be little changed now.EUR/USD fell from 1.0890 to 1.0875 before clawing its way back up to 1.0910 levels currently. GBP/USD also slid to 1.3045 only to climb to 1.3100 and then fall back to 1.3070 at the moment.The yen remains an interest point amid the bond market rout but USD/JPY is seen hugging 123.70-90 levels for the most part during the session.The FOMC meeting minutes later in the day will be a key risk event to watch out for as what is happening in the bond market continues to be where all the action is at – highlighting the battle between central banks and inflation.

Can’t respond to current high inflationECB orientation is geared towards the medium-termAgain, this does not sound like someone who is advocating for tighter policy sooner rather than later. Is it that surprising? Not in the slightest. The central bank continues to toy with market hopes but it is increasingly evident that they don’t really have the stomach for tighter policy when push comes to shove.In turn, this could be a headwind for the euro in the months ahead as the Fed begins to flex its muscles.