Russian President Putin says talks with Ukraine have reached a dead end. A separate Sky News headline said Putin warned Russia would not stop the aggression in Ukraine until completing his goals which wobbled the shaky market foundations and weighed on risk sentiment.

Oil is the primary benefactor, partially on the conflict dragging out longer.

Still, the Forex market’s primary focus is tightening financial conditions and the divergent paths some central banks will take between supporting growth / and tackling inflation concerns. Those in the immediate periphery of the war (ECB+ BoE) will have more extremes in choosing between the two as energy-driven inflation spikes versus growth pullback will be more pointedly felt.

US core inflation is decelerating, which is good news for the Fed and Biden (in terms of political pressure not escalating further for the moment) and initially triggered a reversal of some of the hawkish fixed income prices action of recent days. But of course, the devil is always in the detail. A wrinkle on that softer core read is that the Cleveland Fed trimmed mean and median measures were less promising: trimmed mean rose 0.6%mom, the median rose 0.5%mom. In year-ended terms, the trimmed mean is at 6.05%, a record high back in 1984. FOMC members highlighted trimmed mean specifically in the March minutes, so this bears watching.

Even though the initial read was that the core US CPI numbers go some way to remove the tail risk of an even more aggressive course of action from the Federal Reserve, we are far away from an all-clear on the inflation front. Hence, this should not change anything over the short-term for the Fed as 50bp hikes in both May and June seems entrenched into FOMC’s current views. Indeed ‘Don’t fight the Fed’ has become a more applicable mantra in fading equity market upside than buying dips with the central bank continuing to justify hawkish market expectations for rate hikes through 2022.


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Indeed US CPI got cored and trimmed but is still mean.


Oil seems to be the primary benefactor of Ukraine vs Russia conflict dragging out longer.

But Brent moved back above $100/bbl yesterday as Shanghai relaxed some Covid-19 restrictions, easing concerns around Chinese oil demand, reversing some of this week’s sell-off.

Sort of the light at the end of the tunnel trade, but oil bulls have fingers crossed that light is not a Chinese Covid freight train at the other end of the tunnel. While the easing of lockdowns in housing complexes in Shanghai mitigates some concerns, there is still no actual guided end date for the City to reopen.

OPEC Secretary-General Mohammad Barkindo said that OPEC would not be able to replace the potential loss of >7Mb/d of Russian crude oil and products. He reiterated the comments from the OPEC+ meeting that the current extreme volatility is caused by “non-fundamental factors,” suggesting the group is unlikely to change the course with regards to its monthly quota increase of 400 kb/d

Reports that India’s top refiner informed market participants that Urals crude was no longer on the list of grades under its latest tender also added to the rally supporting oil prices. Social media or US political pressure is starting to sink in.

Finally, the EU’s top diplomat Josep Borrell said that many ministers supported the sanctions, but a few said that such a ban would constitute an “asymmetric shock.” He also allegedly added that nothing is off the table, including sanctions on oil and gas. (Reuters)


Gold upside saw intense action ahead and after the CPI release as bullion buyers still think the Fed cannot douse Oil and Food inflation via higher interest rates. In other words, central banks are defenceless against inflation driven by the war in Ukraine.

Indeed, with Putin suggesting a dead-end in peace talks, gold also remains supported on the no end in sight to Ukraine war narrative as a bit more geopolitical risk premium gets added to the market base.

And Asia demand should be driven by the wealth preservation trade on China’s stimulus as domestic property, equity, and credit markets face headwinds. And INR weakness via oil imports should see gold in demand as a hedge for further INR wobbles through the oil price channel.


USDJPY consolidated its gains above 125.00 overnight, managing a dip down to 125.105 yesterday on further verbal intervention from Japanese Finance Minister Suzuki, before buyers emerged again to take the pair up to 125.76 on rising US yields before paring gains after a slightly less hawkish read on the US CPI

The pair opens the Asia session in familiar territory. Many in the market expected a strong CPI print, so the softer core assessed the USD’s mettle, but the greenback held its own.

125.80/00 is the critical level to watch on the topside in USDJPY (2015 high), and a break above there could pull in model/momentum buyers. On the downside, 125.00/20 is initial support. If taking cues from the US CPI, I do not think it was hot enough to push 126 this week

Originally published by Stephen Innes, SPI ASSET MANAGEMENT