Crude oil consolidates near the $100pb as the latest pandemic news from China and the massive US release from strategic reserves cool down the positive pressure, but there are uncertainties on whether the US could really release 1 million barrels per day for six months to keep oil prices under control.

US futures are in the negative this morning, although the S&P500 ended last week on a last-minute rally. The rising US yields and the curve inversion make investors uncomfortable, and the Federal Reserve (Fed) hawks remain in charge before Wednesday’s FOMC minutes.

Gold is under the pressure of higher US yields, and may not benefit from a renewed equity selloff, if the selloff is due to the rising yields. But geopolitical tensions could throw a floor under a further selloff, if geopolitical tensions escalate amid the West preparing to announce more sanctions against Russia.

Elsewhere, Chinese stocks rally on news that China will let the US authorities access the full auditing reports of companies listed in the US. Bitcoin is stuck within the $45/48K area and GameStop offers a strong intra-day volatility, though not much fundamentally-supported action in medium run.

Intense selloff in crude oil pulled the price of a barrel to below the $100pb level, which is the critical 50-DMA support to the latest crude rally.

The question is, whether Washington could reverse the positive momentum in oil prices with its promise to release a million barrels of oil from the strategic reserves per day, for the next six months starting from next month.

And oh, OPEC and Russia agreed on Thursday to increase the oil output modestly as widely expected, but more importantly, they dumped the International Energy Agency as a data source in a sign of worsening relations with the West.

Falling oil prices couldn’t prevent a selloff in equities yesterday, as investors couldn’t stop worrying about the inversion of the 2-10 year curve, and the rumours of recession that come along with it. The S&P500 lost more than 1.50% yesterday, and Nasdaq failed to extend gains above the 200-DMA.

Bitcoin retreats as failure to clear the 200-DMA resistance encourages some profit taking.

On the data-front, the latest Caixin PMI manufacturing index fell below the 50 mark, showing that the Chinese manufacturing activity contracted in March as the latest measures to contain the Covid outbreak took a severe toll on the economic activity.

Today, the US will reveal how many nonfarm jobs the US economy added last month, and Europe will reveal how bad inflation got in March.

Inflation in Spain came at a spitting distance to the 10% mark, and inflation in Germany shot up to 7.3% in March, compared to 6.3% expected by analysts and 5.1% printed a month earlier.

The EURUSD extended gains to 1.1160 as the jaw-dropping inflation data from the Eurozone countries revived the European Central Bank (ECB) hawks, but the chief Christine Lagarde said that the ECB will only ‘move gradually to normalize policy in the face of raging inflation’.

US crude tanked to $101 per barrel this morning on news that the United States is considering the release of up to 180 million barrels from its strategic petroleum reserve over several months to calm soaring crude prices, as OPEC and Russia are likely to stick to their existing deal to gradually increase oil production.

Cheaper oil gives a positive spin to the equity markets this morning, but inflation worries keep the central bank hawks alert as the US yield curve inversion leads to heated discussions about a possible recession in the US.

On the individual company front, Tesla is reported to have multi-year deals for nickel supply, and Apple wants to reduce its reliance to third parties for its financial products.

On the data front, the latest jobs report showed that the US added 455000 new private jobs in March, in line with the expectations. The Q4 growth has been revised slightly lower to 6.9%. Due today, the PCE index, which is another gauge of inflation will certainly confirm the rising pressures in February and keep the Fed hawks on alert – despite the recent fall in crude oil prices.

Risk appetite improved, equities extended rally as talks between Ukraine and Russia hinted at progress, with Russia retreating from Kyiv to concentrate its military efforts in the Donbas region. The de-escalation gave a sigh of relief to investors, although many, including Joe Biden remain skeptical regarding the pullback from Kyiv, that could be ‘limited and tactical’.

US crude dived to the 50-DMA yesterday, but that critical support held strong, and the price of a barrel rebounded back above the $105 level. The short-term outlook remains positive and price pullbacks are still seen as interesting dip buying opportunities if the 50-DMA is not cleared.

The three major US indices followed up on the European session gains on de-escalation of the situation in Ukraine, but the US 2-year yield caught up, and even briefly surpassed the 10-year yield for the first time since 2019.

Rising US yields, and de-escalation in Ukraine weigh on gold prices.

But, the curve inversion, nor rising inflation prevent US stock indices from extending gains and the meme stocks are on fire, with GameStop up by 158% in the past two weeks and AMC up by more than 160%.

Could the meme craze stretch higher? Yes, it could!

Today, the Eurozone flash inflation figures for March start flowing in, and the US will reveal how many private jobs it added in March today. Strong economic data could revive the Fed hawks, push US yields even higher and dampen the mood.

US equities kicked off the week with gains; the Big Tech led gains, as oil stocks slumped following an almost 10% slump in crude oil prices.

Many oil traders predict that the price of a barrel could reach $200 by the end of the year. Goldman Sachs warns that the barrel of crude at $200 would send the economy into recession.

Nasdaq led gains on Monday, as the index recovered more than half of losses it made since the November selloff, when the Federal Reserve (Fed) hinted at steeper rate hikes and quantitative tightening. The Big Tech is, of course, pulling the index higher, as big tech companies, along with other big cap stocks, are now perceived as safe haven investments when bonds tumble on expectation of a steeper monetary policy normalization.

The Bank of America even warns that the global debt weighted by world GDP is on course for its worst year since 1949. So, it’s not a surprise that Joe Biden wants deficit reduction that would be financed by the biggest tax increase in history in dollar terms.

Elsewhere, Tesla jumps 8% after the latest SEC filing showed that company wants a stock split to pay its stakeholders stock dividend, Bitcoin turns positive for the first time this year and the US JOLTS data will certainly print another strong month of available jobs, that no one wants.

The week kicks off on a mixed note as US President Joe Biden called Putin a ‘butcher’ and said in a speech in Warsaw that ‘for God’s sake, this man cannot remain in power’. Then, the news that Shanghai is going to a phased lockdown didn’t help lifting the mood in Asia.

Oil, which rallied last Friday on news of a drone attack on a Saudi storage facility, slumped again this morning to $110pb. OPEC+ will announce its latest decision this week.

In the FX, the US dollar begins the week on strong footage, as the dollar index advances above the 99 mark on geopolitical tensions and the Fed hawks, but the flattening and the inversion of the yield curve bring about the worries of a recession in the US. The EURUSD slips below the 1.10 mark on the back of a stronger US dollar.

Besides the OPEC decision, investors will watch inflation data from the US and Eurozone, US jobs report, EV deliveries and US House vote on cannabis.

Pot stocks are on fire, as Bitcoin and Ethereum rallies over the weekend. Could the optimism last?

New sanctions against Russia may not include a ban on European oil imports from Russia, but it well includes a ban on Russian gold, as there were signs that Russia was using gold to go around the international sanctions.

Crude oil is down since yesterday, as gold trades near $1695 per ounce.

Then, there is now news that Russia is considering selling its oil and gas in Bitcoin to ‘friendly’ countries like Turkey and China. The news sent Bitcoin’s price above the 100-DMA resistance, yet there are a couple of questions that hang in the air.

Elsewhere, the wild price moves and jaw-dropping margin calls push many investors out of the commodity markets, which, in return, reduce liquidity and has a boosting effect on price volatility.

US equities rebounded yesterday, as Nasdaq led gains. Apple gained more than 2% as well, after announcing that in considers a subscription service to sell its iPhone and other hardware products while cannabis stocks rallied big on news that the US house will vote to legalize marijuana next week.

Risk sentiment weakens as Joe Biden meets the EU leaders today. They are expected to announce new sanctions against Russia in the coming hours. There is a possibility of a ban on Russian oil imports to Europe.

Uncertainties about Russian oil injects volatility in oil trading, and Russia now asks rubles in exchange of its energy and gas.

Meanwhile, Russian market partially opens today, after but only 33 Russian company shares are allowed to trade for a shortened four-hour. The MOEX was up in the first hour of trading, but don’t be fooled by the early rally, because foreigners won’t allowed to sell their stake until April 1st, and short-selling is also banned. And because most of the market was made up of international investors, we will not get a clear picture of the valuations immediately.

With the escalating tensions into today’s Europe – Biden meeting, the dollar firmed against major peers. The EURUSD slipped below the 1.10 mark again and gold tests the $1950 offers.

Equities rallied and treasuries dived yesterday, as a sign that investors are cheering the Federal Reserve’s (Fed) plan to deal more aggressively with the skyrocketing inflation – which is certainly more toxic in the longer run than higher rates for the economic tissue.

The S&P500 had another strong session yesterday gaining more than 1%, and Nasdaq rallied close to 2% as technology stocks led the rally. Tesla gained close to 8%, GameStop soared more than 30% as AMC gained 15%. Chinese stocks had another great day as well. Alibaba rallied 11% yesterday, and more than 55% since last week.

Meanwhile, oil trading is hectic these days, as prices swing between those who rush to sell the top near the $115pb level, and those who rush to buy below $110pb. The news that Germany and Hungary are willing to put the brakes on a potential Russian oil embargo softens the bulls’ hands in the short run, as the long-term outlook remains positive.

Jerome Powell wants to see the US interest rates rise faster. At a speech titled ‘Restoring Price Stability’ yesterday, Powell told the National Association for Business Economics that there could be a 50-bp hike in May, and at subsequent sessions, if the Federal Reserve (Fed) officials conclude that it’s more appropriate to move faster.

Activity on fed funds futures hint that the probability of a 50-bbp hike stands near 65%, hinting that there is more to be priced in for the Fed hawks.

Still, the US 2-year yield could hardly rise faster, and the spread between the 2 and the 10 year is about to turn negative. A yield curve inversion is interpreted as a sign of a coming recession.

Market reaction to Powell’s hawkish speech was contained. The stocks in New York sold off as a kneejerk reaction, but almost erased all losses with a late session rebound, as investors thought that higher rates would be less toxic for companies than higher inflation in longer run.

Meanwhile, energy and commodity stocks remain in demand, as crude oil returns to $115pb. The next natural target for the bulls stands at the latest resistance of $130pb, if cleared will revive the speculation of a further advance toward the $150pb mark.

On the index level, the FTSE was the only winner yesterday in Europe as energy companies pushed the index higher with BP and Shell gaining more than 4% each.

In green news, the SEC now wants companies to disclose their green actions and Ethereum’s Merge update is getting closer to seeing the daylight as the last test has been running smoothly since March 15.