ORLANDO, Florida, March 25 (Reuters) – Stocks rose and oil prices and bond yields dropped on Wednesday, on hopes that the U.S. and Iran are progressing toward a peace deal. Investors’ optimism was reflected in the MSCI All Country equity index clocking its biggest rise in six weeks.
In my column today I look at the recent surge in bets on higher interest rates in light of the Middle East energy shock. Essentially, markets have overshot – the move may be logical, but its magnitude is questionable.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
Today’s Key Market Moves
Today’s Talking Points
* News of great import
Figures on Wednesday showed that U.S. import prices in February rose at their fastest rate in four years, up 1.3% after an upwardly revised 0.6% gain in January. The price of imported capital goods rose the most since 1988.
Rising energy costs in anticipation of conflict in the Middle East were blamed. But remember, oil rose around 15% in January and February – it is up 35% so far this month. Consumers and businesses should brace for even stronger price rises in the coming months.
* Premium service
The valuation premium that U.S. tech has long enjoyed over the broader stock market has almost evaporated. Measured by comparable forward 12-month price/earnings ratios, it is now the smallest in seven years.
The Roundhill “Mag 7” ETF is down 10% this year, three times as much as the S&P 500. Has the correction run its course? JPMorgan reckons the AI story is still losing some momentum, Barclays says the tech growth engine shows few signs of stopping. You pays your money, you takes your choice.
* RoW finally selling Treasuries?
Foreign central banks’ holdings of U.S. Treasuries held in custody at the New York Fed are the lowest since 2012, and poised to fall below $3 trillion for the first time since 2010. The value of these holdings has tumbled $75 billion in the last four weeks.
According to Deutsche Bank, that includes outright selling worth around $60 billion, the most since 2020. Foreign central banks were modest sellers of Treasuries last year, but that was offset by $440 billion of private sector purchases. If official selling is accelerating, will the private sector fill the gap?
What could move markets tomorrow?
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(Reporting by Jamie McGeever; Editing by Nia Williams)
