Another challenge looms for monetary authorities trying to keep inflation under control. Surprise production cuts decided by “OPEC Plus”, which consists of the Petroleum Exporting Organization (OPEC) and major oil-producing countries that are not members. Crude oil prices are on the rise again, and the financial authorities are likely to be forced to make a difficult decision between the risk of a recession (an economic recession), which has already been heightened due to concerns about banks, and concerns about a reacceleration of inflation.St. Louis Fed President James Bullard said high oil prices wereIt may be a little more difficult,” he said. Here are five news items to keep in mind as you start your day.
Complex puzzles
OPEC+’s decision to cut output has prompted central bank officials, who have spent recent weeks worrying about how the financial turmoil will affect their outlook going forward, by warning that oil prices will rise.posed a new problem. “We were starting to see some signs that inflation was normalizing, but now a new problem has resurfaced,” said State Street strategist Maria Beitman. “It is becoming more difficult for central banks,” she said.
$100 in sight again
The OPEC+ decision to cut production has forced us to revise the outlook for crude oil prices, with 1 barrel =$100 is in sight again. The cuts came after OPEC signaled it needed to increase production in the second half of the year, not cut it. The International Energy Agency (IEA) expects demand to surge further this year, and the production cut that caught markets off guard has raised new inflation risks for the global economy. “If they cut into a bullish scenario, they could pass $100 a barrel very quickly,” said Bob McNally of Rapidan Energy Group.
Low level for the first time in about 3 years
Institute for Rice Supply Management (ISM) in MarchThe manufacturing index fell to 46.3, the lowest level since May 2020, worsening than market expectations. The drop in the index for new orders and employment was particularly noticeable. Rising interest rates, growing recession fears and tighter lending conditions may be starting to weigh on business investment. “The pace of new orders continues to be sluggish, raising concerns about when manufacturing growth will resume,” said Timothy Fiore, chairman of the ISM manufacturing research committee.
commercial real estate fund
of funds investing in commercial real estateThe European Central Bank (ECB) has warned that net asset values have more than tripled over the past decade, posing a threat to financial stability. In its report, the ECB said there was a mismatch between investors having frequent opportunities to withdraw their funds and the funds’ holdings being fairly illiquid. He argued that this increased the risk of the fund being hit by runs like those that recently rocked the financial system. Instability in real estate funds “could have a systemic impact” on the commercial real estate market, he said, adding that it could have ramifications for the stability of the overall financial system and the real economy.
Tesla stock drop
US electric vehicle (EV) maker Tesla in the US stock market on the 3rdGreat drop. Despite the company slashing prices on several models, deliveries rose only modestly in the first quarter. There are questions about whether demand will continue to grow in the manner that CEO Elon Musk envisioned earlier this year. “If production continues to outpace deliveries, the debate over price elasticity and general weakness in demand will continue,” Jefferies analyst Philippe Houchois said in a note.
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