Outlook for next week April 4th - April 8th Fundiemntals Only

Key economic release : Tuesday - ISM non manufacturing PMI (10:00 ET) , Wednesday Crude inventories (10:30 ET) FOMC minutes release and Thursday Jobless Claims (08:30 ET)

Inversion of 2 and 10 year yield is deepening which can further weigh on investors sentiment. But do notice high yield credit spread and the 3month and 10 year spread which tends to tell us the short term outlook of a the bond market indicates a relatively healthy economy. Further more real yields which is a more signal for expected inflation near vs long term are not yet inverted which can be a positive sign for the markets.

I'm going to make a couple further bull argument to counter my relatively bearish outlook to potentially justify the market rally. From an economic standpoint Wages rate as per Fridays data still showed healthy growth vs PCE as also reflected in consumer confidence. Unemployment is low(do note participation rate is also lower than pre pandemic), credit growth and retail spending are still healthy. All this means is that there is no problem on the side of demand of the economy. The real problem lies on the side of supply which interest rates obviously won't be able to fix (except cause hard landing by inducing demand destruction) markets are optimistic and expecting the supplies to likely fix itself via demand pull. We have slight evidence of it happening as PCE came on slightly lower than expected.

War - according to the news Russia seems to be losing at least in terms of what they wanted to achieve politically - a swift takeover and return to normal. Dragging this on for months was unlikely their orignal plan considering the public outcry + further sanctions on their economy. That being said like I mentioned before War has started to show little to no impact on markets anymore. Damage has been done and will likely persist. So things can only get worse from here not better. Unless there is a regime change- highly highly unlikely.

Oil be wary, personally I do not see price of Crude staying below a $100 for long. However it is very headline driven. Biden release of 1million barrels a day from US reserve for the next 6 months may sound not enough considering a consumption of ~20million barrels a day in US but combine that with lock downs in China and halt on military operations on the Saudi-Yemeni borders. The sentiment is definitely weighing towards the downside.

China's 0 Covid policy can also weigh on US markets, especially if it gets worse which seems like it is as per case count.  Putting pressure on companies like Tsla whos Shanghai Giga Factory was forced to close due to the lockdown and won't be able to open Monday as previously intended. China is the manufacturer of the world so if they stop well imagine inflation!