Oil prices rose despite an agreement by the United States and other major governments in the International Energy Agency to release 60 million barrels from strategic reserves to boost supplies.
“The conspiracy of geopolitical uncertainty and stagflation-type impulses is a brutal shock,” Tan Boon Heng of Mizuho Bank said in a report. The surging oil prices are likely to push inflation only higher, which means the threat is rising for something investors have not seen for a long time: an economy that’s stagnating in the face of high inflation, something called “stagflation.” Brent crude, the international standard, rose 5 percent to $110.20 per barrel. oil jumped another 5.4 percent to $108.99 per barrel, and it climbed as high as $112.51 in the morning to touch its highest level since 2014. The 10-year yield was above 2 percent last month, before it plunged as investors plowed into investments seen as safer amid worries about war. Yields, though, remain well below where they were before Russia’s invasion. The yield on the 10-year Treasury jumped to 1.80 percent from 1.72 percent late Tuesday, while the two-year Treasury leaped even more to 1.47 percent from 1.31 percent. All the while, higher interest rates tend to put downward pressure on stocks and most other investments. The Fed is balancing a tightrope where it needs to raise interest rates enough to rein in the highest inflation in generations but not so much that it pushes the economy into a recession. economy “highly uncertain,” adding that “we’re never on autopilot.” Powell also said the attack on Ukraine may have muddied conditions, with its impact on the U.S. That would be the first increase since 2018, but it would also be more modest than some investors along Wall Street earlier had been fearing, and gains for stocks accelerated following the comments. On top of that are worries about what upcoming hikes in interest rates by the Federal Reserve and other central banks around the world will do to the economy and inflation.įed Chair Jerome Powell said in testimony to Congress on Wednesday that he would support raising his central bank’s key interest rate by a quarter of a percentage point this month. Most recently, Russia’s invasion of Ukraine has caused prices to soar for oil and other commodities where the region is a major producer. Markets have been spinning wildly as investors try, sometimes blindly, to gauge how large an impact two big forces will ultimately have.
WATCH: What’s behind the current stock market volatility?
Gold receded, and a measure of nervousness among stock investors on Wall Street was easing after swinging sharply in recent days. The S&P 500 was 1 percent higher in morning trading, while Treasury yields jumped to recover a sliver of their steep losses from the past week. NEW YORK (AP) - Oil prices kept surging Wednesday and briefly topped $110 per barrel as Russia’s war continues against Ukraine, but stocks and other markets were showing less fear than a day earlier.
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