Suderman says: Fed Governor Powell spooks markets with rate hike fears

Testimony by Federal Reserve Chair Jerome Powell spooked financial markets, with stocks and bonds lower and the dollar higher, after he drove interest rate expectations higher for longer, with futures expectations now peaking at 5.75% to 6.00%, and staying high into next year

Powell argues Fed faces more inflation challenges

Powell indicated that it may be necessary to ratchet the pace and scale of rate hikes as economic data came in stronger than expected since the latest meeting of the Federal Open Meeting Committee
The Fed is prepared to increase the pace of rate hikes "if the totality of the data were to indicate that faster tightening is warranted”
Policymakers will watch Friday's jobs report, and updated inflation data ahead of that next Fed meeting
Fed fund futures are pricing in a 25- to 50-basis point rate hike at the next meeting. The Fed's next policy meeting is scheduled for March 21-22

Markets spooked by rate hike fears

Broad stock market indices fell 1.5%. Yet Wall Street’s panic indicator, the VIX index, was unchanged at 19
Yields on 12-year and 10-year Treasuries traded up to 4.96% and 3.95%, respectively, close to psychologically important 5% and 4% levels
This move in bonds puts the inverse spread above 100 basis points, reflecting the market's expectations for recession
The dollar index rallied sharply this morning to trade above 105.5, 3.5% higher than January lows

Commodities weaker on recession fears

The broader commodity sector came under pressure on recession fears and a stronger dollar
Crude oil prices fell over 3%, failing to successfully hold a move above the 100-day moving average
Grain and oilseed traders are focused on the USDA's monthly WASDE crop report tomorrow, which could reinforce the message that Argentinian corn and soybean production are weaker on bad weather
Grain and oilseed markets were mixed to lower

China rebounds? Ukraine grain exports continue?

After disappointing news, there are encouraging signs that China’s economy will see a healthy rebound this year, with a notable increase in stocking up with raw commodities for goods production. This will boost commodity demand across the board
On the other hand, Chinese exports contracted for the fifth month in a row in February, with shipments in the first two months of this year down 6.8% from the previous year, not good news for China’s export-dependent economy
Online negotiations are underway with Russia to extend the Ukraine grain export initiative. The current agreement is good through March 18, with traders still expecting another 120-day extension

Analysis by Arlan Suderman, Chief Commodities Economist

Contact: Arlan.Suderman@StoneX.com

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.