#SP500:
Recession concerns are showing up more prominently in the U.S. Treasury yield curve. The closely watched gap between yields on two- and 10-year notes stood at its narrowest since March 2020 on Friday, a signal that some investors may be anticipating that economic growth will slow from its current robust pace. Market participants watch the yield curve for insight into the U.S. economy. An inverted curve, where rates on short-term government debt exceed those on longer-term debt, has reliably predicted past recessions. While expectations of a 50 basis-point hike this month have been all but priced out in recent weeks, markets still expect over 150 basis points of tightening by next February. This is a negative signal for the stock market.
Trading recommendation: sell 4280 and take profit 4200.
#WTI:
Soaring Brent crude oil prices are tracking the same path as in 2008, when they hit a record $147 a barrel before demand destruction kicked in and prices crashed in a global recession. Oil prices have become so disconnected from the marginal cost of supply - given the extreme shortage of oil - that they are marching to the level where demand destruction becomes prevalent. A coordinated release of 60 million barrels of oil from strategic reserves by International Energy Agency member countries was agreed on Tuesday but failed to calm spiking prices. Oil inventories in the developed world have been steadily decreasing in recent months amid a sharp post-pandemic demand recovery.
Trading recommendation: buy 114.63 and take profit 111.84.
XAUUSD:
Prices of raw materials from wheat to various metals have soared to multi-year highs as Western sanctions have disrupted air and sea shipments of commodities produced and exported by Russia. This factor will have a positive impact on the growth of inflation worldwide. Traders this week will be watching data on U.S. inflation, due out Thursday. Consumer prices in January grew at their fastest pace in nearly four decades. High inflation has a positive impact on the value of gold. Inflows into exchange-traded funds on the back of the war in Europe and the economic fallout may also provide a pillar of support for bullion prices.
Trading recommendation: buy 1974.50 and take profit 2000.50
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