Commodities Skyrocket, Oil Shoots to 125 USD
07 March 2022
Volatility in the markets was highly elevated on Monday as investors remain nervous from the war in Ukraine and ongoing sanctions on Russia, which are crippling the global economy.
All the major commodities are rallying hard today, pushing gold to 2,000 USD, silver to 26 USD, and copper above the 5 USD threshold for the first time ever.
Oil is the one clear winner in the current situation, pushing to 125 USD today, rising 10% today. Soaring oil prices to these levels will likely cause a global economic recession in the future, possibly with the same magnitude we saw in 2008/2009 when oil went to 150 USD.
In the absence of significant macroeconomic data releases, investors will keep a close eye on the third round of talks between Russian and Ukrainian delegations.
On Friday, data showed that the US economy created 678,000 jobs in February, well above the 400,000 expected. Additionally, the unemployment rate improved more than forecast and slipped from 4.0% to 3.8%. On the other hand, wage growth slowed notably, both yearly and monthly.
Moreover, the Fed has confirmed it is ready to raise the federal funds rate by 0.25% at its March meeting. Earlier in February, investors had priced a 50 bps rate hike, but that has now faded due to the military conflict in Ukraine.