Concerns over the rising costs of commodities and its effects on inflation sent prices of US Stocks and futures southward. S&P 500 futures fell 1%, while Nasdaq 100 futures dropped 1.2%. Nickel prices have risen by 111% to $101,365 a tonne on the London Metal Exchange. Crude Oil prices continued to go up with WTI climbing 2.7% to $122.66 per barrel on fears of disruption. Demand for asset havens persisted as Gold was at $2,016.87 an ounce, up 0.9% while 10-year USTs remained stable at 1.78%. Law makers in the U.S are moving toward banning imports of Russian crude oil and Russia has also threatened to turn off natural gas supplies to Europe via the Nord Stream 1 pipeline. Consequently, the conflict in this region and the economic warfare against the resource-rich Russia continues to paint a gloomy picture for global economic outlook. Data for US CPI, initial jobless claims are expected on Thursday.
Bunds closed weaker on Monday, with the 10Y almost turning positive at one point, as the market parsed possible sanctions on Russian oil sales. While German Chancellor Olaf Scholz later came out to push back against cutting off Russian supplies, Russian Deputy Prime Minister Alexander Novak later that evening said Nord Stream 1 supplies may be cut further ramping odds of higher inflation. 10Y DBRs open steady as are peripherals, albeit with some slight firming in 10Y BTPs as they attempt to reverse a 5bps drop in yield from Monday. Some mixed figures from earlier data releases: German industrial production for January topped estimates at 2.7% (vs expected 0.5%) for the month while Spain’s own underwhelmed at 1.7% YoY (vs expected 2.3%). Other figures due today include Q4 GDP and employment numbers for the Eurozone as well as Italian retail sales.
After the news on a possible ban of Russian oil and natural gas by US and allies, USDRUB reached 170 level. NICKEL jumped more than 120% to $100 000 per ton on the possible ban of raw materials from Russia. Norilsk Nickel is one of the largest nickel and palladium producer in the world. The Standard & Poor’s has cut credit ratings of 52 Russian companies from “BBB-” to “CCC- “, Gazprom, Rosneft, Lukoil, Novatek, Severstal shares fell on the downgrade. A 3rd round of negotiations between Russian and Ukrainian officials on humanitarian corridors has made little progress. In response to the West, Moscow said that Russia would cut off gas supplies to Europe. As such, it could hit the continent badly and lead to major power collapse.