The market perceives further Fed plans as positive

As labor demand remains strong, the number of US new jobless claims fell last week. Initial applications fell by 15,000 to 214,000. In February, the US industrial production increased by 0.5% from the previous month.

Despite sanctions, JPMorgan processed a Russian government payment order for coupon payments on two Eurobond issues totaling $117.2 million. JPMorgan is the correspondent bank through which Citigroup’s Russian payments go. JPMorgan and Citigroup representatives declined to comment.

International rating agency S&P Global Ratings has decided to downgrade Russia’s long-term sovereign credit rating from CCC- to CC, keeping the negative outlook.

Delta Air Lines Inc. and Airbus Group SE signed a memorandum of cooperation in the field of research and development of hydrogen aircraft.

Today is “Witching Friday” in the US, called “Quadruple Witching Day.” Most contracts (index futures, index options, and options) expire on that day. As a result, trading volume and market volatility sharply increased in the last hours.

In February, Europe’s inflation rate reached 5.9% (previous 5.8%) in annual terms. Economists have warned that Russia’s invasion of Ukraine will cause further increases in energy prices, leading to more inflation in the coming months. But ECB officials believe the situation is under control, so they do not plan to tighten monetary policy.

Oil prices increased more than 7% due to renewed focus on supply shortages in the coming weeks due to sanctions against Russia. Western governments are still unable to negotiate with OPEC+ to get more oil from the Persian Gulf to replace the barrels likely to be lost from Russia. Among OPEC+ countries, only Saudi Arabia and the UAE can quickly increase production to offset supply cuts from Russia.

Gold added 1% as the US dollar, and Treasury yields declined. Longer-term, higher interest rates will weigh on the precious metals.

Asian stock indices increased yesterday. Japan’s Nikkei 225 (JP225) gained 3.46%, Hong Kong’s Hang Seng (HK50) added 7.04% on the day, and Australia’s S&P/ASX 200 (AU200) increased by 1.05%.

On Friday, the Bank of Japan maintained its massive stimulus measures and warned of increased risks to the economic recovery due to the war in Eastern Europe. The Bank of Japan kept its short-term rate target at -0.1% and the 10-year bond yield at 0%. With Japan’s inflation and wage growth lagging behind other countries, the Bank of Japan has no choice but to maintain its stimulus measures patiently. This ultra-soft policy has allowed Japan’s inflation rate to rise slightly to 0.6% (previous 0.2%) on an annualized basis, but it is still well below the 2% target.

US President Joe Biden and Chinese President Xi Jinping will hold telephone talks today. The two heads of state are expected to discuss bilateral relations and the situation around Ukraine.