Great concern about the direction of the American market


Great concern about the direction of the American market and oil is retreating after Wednesday’s jump

The Ministry of Economic Development of Russia published the gross domestic product figures for the month of January,
where the figures were high on an annual basis, amid expectations that these results will change for the current month

Evest follows market developments in the next report



Before sanctions Russia’s GDP rises

Oil is falling slightly after yesterday’s big jump

Investors are concerned about the state of the US economy

Before sanctions Russia’s GDP rises

Russia’s GDP, according to the Ministry of Economic Development,
in January 2022 increased by 6.6% compared to January 2021, the data is available on the Ministry’s website

This time, the Ministry of Economic Development did not publish its monthly report “On the situation in the Russian economy
(it always included an assessment of GDP dynamics), which was traditionally released on the same day
as the Rosstat report (for January, Rosstat published its report on March 2)

Thus, the annual GDP growth rate of the Russian Federation in January 2022 significantly accelerated compared to the end of 2021
– the Ministry of Economic Development estimated economic growth in December 2021 at 4.3%, in November – by 5.3%, in October – by 4.9%

Fitch expects Russia’s GDP to fall by 8% and inflation to rise to 18% in 2022

As reported, in 2021 the GDP of the Russian Federation, according to a first estimate by Rosstat, grew by 4.7% after declining by 2.7% in 2020

The current official forecasts of the Ministry of Economic Development and the Central Bank of the Russian Federation
on the dynamics of Russia’s GDP for 2022 are no longer relevant (the Ministry predicted 3% growth,
the Central Bank – by 2-3%), the forecast is expected to update in April

The Bank of Russia, in its statement following the results of the board of directors on March 18,
indicated that it expects a decrease in Russia’s GDP in the coming quarters,
but that measures taken jointly with the government will limit the extent of the economic downturn

“Operational indicators, including the results of corporate monitoring conducted by the Bank of Russia,
indicate a deteriorating situation in the Russian economy.

Companies in many industries report

difficulties in production

and logistics against the background of trade and financial restrictions imposed on Russia,” the Central Bank said in a statement.

Sharply increasing uncertainty is negatively affecting the mood and outlook of the population and business

The Central Bank noted that “according to the Bank of Russia, there will be a decline in GDP in the coming quarters.

It will be mainly related to supply-side factors, and as a result will have a limited effect on reducing inflation

This board meeting was not a pivotal one, so the central bank did not present its forecasts for this year.

The Bank of Russia will publish new medium-term forecasts based on the results of the upcoming Board of Directors on April 29

Analysts surveyed by the Central Bank in early March predicted that inflation in the Russian Federation in 2022 would reach 20%,
and GDP may fall by 8% (the survey was conducted from March 1 to March 9, the data was published on March 10 )


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Oil is falling slightly after yesterday’s big jump

Oil prices fell moderately on Thursday morning after a sharp rise the previous day amid concerns about supply from investors and an unexpected drop in US inventories

The price of Brent crude for May on the London ICE Futures Exchange on Tuesday was $121.04 a barrel,
$0.56 (0.46%) lower than the previous session’s closing price.

As a result of Wednesday’s trading, these contracts rose by $6.12 (5.3%) to reach $121.6 a barrel

West Texas Intermediate oil futures for May in electronic trading on the New York Mercantile Exchange (NYMEX) by this time rose in price to $113.95 a barrel,
which is $0.98 (0.85%) lower than the final value of the previous session.

The day before, the cost of these contracts rose by $5.66 (5.2%) to $114.93 a barrel

Since the beginning of the week, the price of Brent crude has increased by about 13%, WTI – by 11%.

Rising oil prices are contributing to market anxiety about reducing already insufficient supply
due to the armed conflict in Ukraine and the imposition of sanctions against Russia+

Caspian Sea Pipeline

On Wednesday, the Caspian Sea Pipeline Consortium (CPC), which transports Kazakh and Russian oil to international markets,
halted the loading of oil at a terminal near Novorossiysk due to abnormally unfavorable weather conditions and reduced pumping,
and announced that a complete halt is possible in one day

According to Deputy Prime Minister of the Russian Federation Alexander Novak,
oil may not be delivered from this terminal for up to two months.

As a result, supply could be reduced by 1.2 million barrels per day,
providing 1.2% of global demand for this energy resource

Meanwhile, data from the US Department of Energy showed that the country’s commercial oil reserves in the week ending March 18 fell by 2.51 million barrels – to 413.4 million barrels.

Experts polled by Bloomberg expected a less severe drop – just 750,000 barrels

According to analysts, “We will witness a record decline and a rise in prices to 150 dollars a barrel this summer

Investors are concerned about the state of the US economy

With the Federal Reserve embarking on a tight cycle of inflation to control inflation,
investors are concerned about the state of the US economy and what the bond market has to say

If the yield curve is not inverted – when long-term debt instruments have a lower yield than short-term debt instruments – it may portend a recession.

And all this comes at a time when a slowdown in growth seems inevitable due to the upcoming aggressive monetary policy tightening by the Federal Reserve

The recent rise in yields was blamed on market concerns over the Fed’s tight monetary policy stance.

On Monday, Federal Reserve Chairman Jerome Powell stated that inflation is “very high” and that a 50 basis point rise is now possible

“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate
by more than 25 basis points at a meeting or meetings, we will do so,” Powell said at the National Association for Business Economics conference

“The risk is growing that a prolonged period of high inflation could push long-term expectations uncomfortably higher,
underscoring the committee’s need to move quickly,” he added

At its March meeting last week, the Fed also raised interest rates by a quarter point for the first time since 2018

Goldman Sachs also revised its forecast after Powell’s speech, and now expects two 50bp increases at the May and June meetings
and then raised by 25bp at the remaining four meetings of the year