As war continues to rage between Russia and Ukraine further uncertainty piles on top of inflationary pressures from post-pandemic recovery and surging oil prices.
This morning all major indices opened lower, while oil, gas and gold prices are up. S&P 500: -39.53 (-0.91%) to 4,323.96, DJ30: -389.21 (-1.15%) to 33,405.45, NSDQ100: -56.15 (-0.41%) to 13,479.78, Crude oil +$4.09 (+3.80%) to $111.76 a barrel and Gold: +$14.10 (+0.73%) to $1,950.00 per ounce.
The US did manage to release better than expected labor data however. Total nonfarm payroll employment rose by 678,000 in February, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, health care, and construction.
Average hourly earnings for all employees on private nonfarm payrolls, at $31.58 in February, were little changed over the month (+1 cent), after large increases in recent months. Over the past 12 months, average hourly earnings have increased by 5.1 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents to $26.94.
The Bank of Canada today increased its target for the overnight rate to ½ %, with the Bank Rate at ¾ % and the deposit rate at ½ %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds on its balance sheet roughly constant until such time as it becomes appropriate to allow the size of its balance sheet to decline.
Economic growth in Canada was very strong in the fourth quarter of last year at 6.7%. This is stronger than the Bank’s projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand.
CPI inflation is currently at 5.1%, as expected in January, and remains well above the Bank’s target range. Price increases have become more pervasive, and measures of core inflation have all risen. Poor harvests and higher transportation costs have pushed up food prices. The invasion of Ukraine is putting further upward pressure on prices for both energy and food-related commodities. All told, inflation is now expected to be higher in the near term than projected in January. Persistently elevated inflation is increasing the risk that longer-run inflation expectations could drift upwards. The Bank will use its monetary policy tools to return inflation to the 2% target and keep inflation expectations well-anchored.
Following the conclusion of the 26th OPEC and non-OPEC Ministerial Meeting, held via video conference on 2 March 2022, and based on internal consultation held exclusively by the OPEC and participating non-OPEC oil-producing countries in the Declaration of Cooperation of (DoC), it was noted that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments.
The OPEC and participating non-OPEC oil-producing countries decided to:
Reaffirm the decision of the 10th Ministerial Meeting on 12 April 2020 and further endorsed in subsequent meetings including the 19th Ministerial Meeting on 18 July 2021.
Reconfirm the production adjustment plan and the monthly production adjustment mechanism approved at the 19th Ministerial Meeting and the decision to adjust upward the monthly overall production by 0.4 mb/d for the month of April 2022, as per the attached schedule.
Reiterate the critical importance of adhering to full conformity and to the compensation mechanism taking advantage of the extension of the compensation period until the end of June 2022. Compensation plans should be submitted in accordance with the statement of the 15th Ministerial Meeting.
Hold the 27th OPEC and non-OPEC Ministerial Meeting on 31 March 2022.