Making Sense

Crude Prices rallied further to $91 a barrel, levels not seen since Oct 2023, on escalating Geopolitical tensions in the Middle East following the Israeli attack on Iranian Embassy compound in Damascus and  UAE's suspension of diplomatic coordination with Israel in the wake of the death of seven World Central Kitchen humanitarian workers in Gaza. 

 U.S Yields moved higher and USD index consolidated overnight. A Ukrainian drone strike caused a fire at the Ryazan oil refinery near Moscow, one of Russia’s biggest crude-processing facilities. A site in the southern Rostov region was also hit. Both halted operations. Ukraine has stepped up its attacks on critical infrastructure in recent months. On Tuesday it launched strikes targeting energy sites in at least seven Russian regions [Source: Economist].  Brent Crude prices have been consolidating in a 81.00 - 84.00 zone since early part of February 2024. From a technical standpoint, there is a H&S formation plus and ascending triangle and a decisive breakout above $ 84.50 could turnout to be potent with 2023 highs of $ 96 per barrel in potential targets. Fed Fund Futures are now implying 78 bps of rate cuts into 2024 from 84 bps yesterday. We have the all important PPI [consensus 0.30%] / Retail Sales [ consensus 0.40%] and the Initial and Final Jobless Claims data. ...

Today's blog is very late in the day. My mother recommended "Lessons in Chemistry" by Bonnie Gamus and boy , I have not been able to put down that book. I am really tempted to write about the book but may be later. I strongly recommend everyone to read the book.  On that note, back to markets: Just attaching a snapshot below since it's too late... Fed Fund Futures are pricing in 22 bps of rate cut by June and 91 bps of rate cut by Dec 2024.