US FINANCIAL MARKET

Stocks Edge Up Amid Ukraine Concerns – Wall Street Journal, 3/25/2022

• U.S. stock indexes mostly rose Friday at the open, putting them on track for a second consecutive week of gains.
• Investors have been piling into U.S.-listed companies in recent sessions, suggesting that many are gaining confidence that the economy will weather the escalating war in Ukraine and rising interest rates.
• The S&P 500 added 0.2%, on course for a gain of roughly 1.5% for the week. The index gained more than 6% last week.
• The Dow Jones Industrial Average was up 0.5%, while the tech-heavy Nasdaq Composite declined 0.4%.
• The gains came despite a continued rise in benchmark Treasury yields.
• The yield on the benchmark 10-year Treasury note jumped to 2.447% from 2.340% on Thursday.
• This would mark the 12th rise in 15 sessions.
• Oil prices slipped, with global benchmark Brent crude declining 1.3% to $114 a barrel.
• Brent has gained around 5% this week as self-sanctioning measures by trading houses and refineries to avoid Russian oil began to feed into the market, traders said.
• Consumer confidence for March fell, according to a University of Michigan survey released Friday.
• The metric has been slipping in recent months as consumers, particularly lower-income households, hold more pessimistic outlooks on the economy.
• Overseas, the pan-continental Stoxx Europe 600 advanced 0.2%. Swedish engineering firm Trelleborg soared 23% after Yokohama Rubber said it would acquire its tire business for $2.2 billion.
• Russian stocks fell 3.7% a day after the Moscow stock exchange partially reopened after a month-long closure, reversing some of Wednesday’s 4.4% jump. Gazprom slid 12% and Russia’s largest lender Sberbank declined 3.5%.
• In Asia, major benchmarks were mixed. Chinese stocks came under pressure as a U.S. watchdog said delisting U.S.-listed Chinese stocks was still on the table.
• The Shanghai Composite Index slipped 1.2% and Hong Kong’s Hang Seng Index fell 2.5%. Japan’s Nikkei 225 edged up 0.1%.

U.S., EU Reach LNG Supply Deal to Cut Dependence on Russia – Bloomberg, 3/25/2022

• The U.S. and the European Union will push to boost supplies of liquefied natural gas to European countries by the end of 2022 in a bid to begin to displace some Russian gas, a political framework that now leaves companies to sort out the details.
• Under the agreement, Europe will get at least 15 billion cubic meters of additional LNG supplies by the end of the year, though it’s not clear where it will come from.
• Member states will also work to ensure demand and facilities to take in up to 50 billion cubic meters of American fuel until at least 2030.
• The aim is to work with international partners to help the continent wean itself off Russian gas, which accounts for about 40% of Europe’s needs.
• Russia ships about 150 billion cubic meters of gas to Europe via pipelines every year, and another 14 billion to 18 billion cubic meters of LNG.
• That means any disruptions to flows of pipeline gas from Russia would hard to cope with.

Oil Falls as Europe Holds Off on Banning Russian Crude Imports – Bloomberg, 3/25/2022

• Oil fell as the European Union shied away from banning Russian crude imports, while Kazakhstan said disruption at a key export terminal is set to ease.
• Futures in New York fell as much as 3.3%, trading in a $4 range on Friday.
• Markets sold off after the EU and U.S. announced an agreement to cut reliance on Russian natural gas, though several nations remain uncomfortable with any potential oil embargo on a major supplier.
• Meanwhile, crude oil loading from Kazakhstan’s Caspian Pipeline Consortium link has partially resumed.
• EU industrial powerhouse Germany has said it plans to quickly wean itself off Russian fossil fuels, though warned an immediate embargo is not possible because of the damage it would cause to Europe’s biggest economy.
• Austria also said it won’t agree to a ban of Russian oil and gas.

Biden, Allied Leaders Discussed New Round of Oil Reserve Release – Bloomberg, 3/25/2022

• The U.S. and other major economies this week discussed oil supply and the potential for another round of releases, President Joe Biden’s top national security aide said, raising the prospect of new government intervention to ease supply strains.
• National Security Advisor Jake Sullivan said oil prices and tapping emergency stockpiles were discussed in sessions Thursday in Brussels, where Biden met with NATO, Group of Seven and EU counterparts.
• It came up in particular with the G-7, and it was a “major topic of conversation,” he said.
• “This was not just about talking; it was about thinking about the steps we can take,” Sullivan said, before signaling there could be an announcement in the near future. “I will not steal the thunder of the administration on that issue.”

Global equity funds gain big inflows after three weeks of outflows – Reuters, 3/25/2022

• Global equity funds found a reprieve in the week ended March 23, as investors turned net buyers after selling them in the previous three weeks.
• Global equity funds obtained $19.66 billion in the week, the most since the week ended Feb. 9, Refinitiv Lipper data showed.
• U.S. equity funds led purchases with inflows worth $13.88 billion, while European and Asian funds received $4.14 billion and $1.19 billion respectively.
• Among sector funds, tech funds secured $2.13 billion, the biggest weekly inflow since July 2021, while healthcare and financials pulled in $1.71 billion and $0.58 billion in net buying.

GM will idle Indiana truck plant for two weeks over chips shortage – Reuters, 3/25/2022

• General Motors said Friday it will idle for two weeks in April an assembly plant in Indiana that builds pickup trucks, over ongoing semiconductor chip shortages.
• The Detroit automaker said it will halt production at its Fort Wayne assembly plant, which builds the Chevrolet Silverado 1500 and GMC Sierra 1500, for two weeks starting April 4.
• “There is still uncertainty and unpredictability in the semiconductor supply base, and we are actively working with our suppliers to mitigate potential issues moving forward,” GM said Friday.
• GM noted that overall it has “seen better consistency in semiconductor supply through the first quarter compared to last year as a whole. This has translated into improvement in our production and deliveries during the first three months of the year.”

Bed Bath & Beyond Adds New Directors in Deal With Activist Ryan Cohen – Wall Street Journal, 3/25/2022

• Bed Bath & Beyond said it would add three new directors and explore options for its buybuy Baby business as part of an agreement with activist investor Ryan Cohen.
• The agreement announced Friday comes after Mr. Cohen sent a letter to the company criticizing the retailer’s turnaround strategy and calling for a separation of the buybuy Baby chain or a sale of the entire company.
• Mr. Cohen’s firm, RC Ventures LLC, owns a roughly 9.8% stake in Bed Bath & Beyond.
• As part of the agreement, three RC Ventures’ director designees—Marjorie Bowen, Shelly Lombard, and Ben Rosenzweig—would immediately join Bed Bath & Beyond’s board of directors, the company said.
• They would also stand for election at the company’s annual meeting, after which the board would revert to its current size of 11 members in total, Bed Bath & Beyond said.
• Two of the new independent directors, Ms. Bowen and Mr. Rosenzweig, would join a four-member strategy committee to explore alternatives to unlock greater value from the buybuy Baby business, which sells baby gear, furniture, clothes and more.

European Lawmakers Reach Deal on Sweeping New Digital-Competition Law – Wall Street Journal, 3/25/2022

• European lawmakers reached agreement late Thursday on the main points of a new digital-competition law focused on the world’s biggest tech companies, setting the stage for one of the most sweeping pieces of technology-regulation legislation to go into effect next year.
• The new law, known as the Digital Markets Act, is part of the biggest proposed expansion of global-tech regulation in decades.
• It seeks to impose new obligations and prohibitions on a small cadre of digital giants the European Union defines as gatekeepers—backed by fines for noncompliance that, based on early drafts of the legislation, could rise into the tens of billions of dollars.
• Provisions in the text, if agreed upon, would allow developers to make their apps available to iPhone users without going through Apple’s App Store and could limit how sites such as Alphabet’s Google and Amazon.com can rank their own products and services ahead of those offered by smaller competitors in search results.

China Crash Mystery Grows as Evidence Signals Midair Breakup – Bloomberg, 3/25/2022

• At least one piece of the Boeing Co. 737-800 that crashed in China appears to have broken loose well before impact, a finding that adds mystery to the plane’s fatal dive.
• The piece suspected to have come from the China Eastern Airlines jet was found about 10 kilometers (6 miles) from the main wreckage area, Chinese officials said at a briefing Thursday.
• If investigators confirm that the part came from the jet, it would indicate the plane suffered some kind of midair breakup, which could offer clues about what led to Monday’s crash or at least shed light on the flight’s final seconds.
• The highly unusual dive has baffled crash investigators and safety experts.
• Aircraft such as the 737-800 are designed not to dive so aggressively, so some kind of aircraft failure or pilot action would be required to keep its nose pointed down for so long.

Goldman Sees Half-Point Fed Hikes in May and June, Higher Yields – Bloomberg, 3/25/2022

• Goldman Sachs Group said it now expects the Federal Reserve to raise interest rates by a half-percentage point at both its May and June meetings to contend with surging inflation, leading the Wall Street bank to revise up its forecasts for U.S. Treasury yields across the curve.
• The bank now sees shorter-dated yields rising at a faster pace than longer-dated ones, causing the yield curve to invert by around 20 basis points.
• It predicts that 2-year yields — now around 2.24% — will rise to 2.9% at the end of this year and 3.15% at the end of 2023.
• Its 2022 forecast on 10-year yields was revised to 2.7%, up from 2.25% previously.
• The 10-year yield was around 2.45% in trading Friday.
• An inverted yield curve is normally seen as a warning signal of a recession.
• But Goldman Sachs said that while the risk of an economic slowdown has increased, a modestly inverted curve is a less definitive predictor of a recession, especially in a high-inflation environment like today’s.
• Inversions were much deeper in the 1970s and early 1980s ahead of a recession, it said.

Citigroup Sees Fed Raising Rates by Half Point at Next Four Meetings – Bloomberg, 3/25/2022

• Citigroup economists boosted their forecast for Federal Reserve interest-rate increases this year and now see 2.75 percentage point of hikes — including four straight half-point moves — amid persistent inflation.
• In addition, “we expect the Fed to continue hiking into 2023” and sending the benchmark rate to a range of 3.5% to 3.75%, analysts led by Andrew Hollenhorst said in a research note Friday.
• That’s well beyond the 2.8% level that central bankers expect to reach, based on the median of projections released last week. “Risks to the terminal policy rate remain to the upside given the upside risk to inflation,” the economists said.
• The Fed projections showed policy makers see quarter-point hikes at each of the remaining six meetings this year, following last week’s quarter-point liftoff from two years of near-zero borrowing costs.
• Citigroup’s forecast was previously for 2 percentage points of hikes in 2022.