Here's what I'll be covering in today's newsletter:

1. When Geopolitics mess with Oil prices
2. Is the U.S. economy too strong?
3. What's up with bond yields?
4. Growth expectations: U.S. vs UK

Current Market Fear & Greed

The current reading of 40% from CNN indicates a low level of confidence from investors. This has decreased 20% from two weeks ago.

The stock market is a barometer of investor sentiment. When investors feel greedy, the market tends to rise; when they feel fear, it tends to fall.

Market Insights

As we navigate another eventful week in the markets, I’m here to break down some complex stuff into simple updates we can all digest. Grab a coffee, and let’s dive into the key happenings and how they might touch our financial lives.

1. When Geopolitics mess with Oil prices

The ongoing battle between Israel and Iran isn't just headline news—it's also impacting the oil markets. After a sharp spike with oil prices breaching $90 per barrel following an Israeli strike, prices have steadied but remain volatile. This tension keeps the risk premium on oil high. A risk premium, in this context, refers to the extra cost built into oil prices due to geopolitical risks. Essentially, traders price in the potential for future supply disruptions caused by unrest, meaning we could see more price jumps depending on how things unfold.

2. Is the U.S. economy too strong?

Over in the States, the economy is booming. According to the latest figures from the International Monetary Fund (IMF), the U.S. is set to grow by 2.7% in 2024. Sounds great, right? But here's the catch: this strong growth is actually pumping up prices across the board. It's like when everyone’s buying but there’s not enough to go around—prices just keep climbing. This puts the Federal Reserve in a tough spot because they need to juggle keeping growth healthy without letting inflation run wild. Their solution? They might just keep interest rates high for a bit longer.

3. What's up with bond yields?

Recently, U.S. Treasury yields, which are basically the interest rates the government pays on its own borrowed money, hit a 2024 high with ten-year notes at 4.73% and one-year notes peaking at 5.74%. Why should we care about these numbers? Well, they act like a thermometer for the economy’s health and investor sentiment. High yields typically mean that investors are expecting stronger economic conditions but are also less optimistic about the Federal Reserve cutting interest rates anytime soon. When yields rise, it suggests that investors believe the economy is doing well enough that the Fed won’t need to lower rates to stimulate growth.

4. Growth expectations: U.S. vs UK

Let’s look at ‘real yields’—interest rates on bonds adjusted for inflation. In the U.S., these have been on the rise, suggesting that investors are pretty positive about growth prospects. It’s a different story in the UK, where real yields haven’t really shifted, hinting at less optimism about economic growth. This difference tells us a lot: investors are seeing the U.S. as a hotter spot for their money right now, attracted by the potential for better returns in a growing economy. On the flip side, the static real yields in the UK could be signalling caution, making it less appealing for those looking to maximize returns.

In today's fast-paced financial world, just keeping up with the latest trends isn't enough; it's about leveraging them to your advantage. Understanding these shifts is one thing, but the real impact comes from applying this knowledge effectively to your assets. This is where my expertise comes in. Why not have a chat with me, at no charge, to discuss how we can turn these insights into intelligent, personalised strategies tailored for your investment goals? It's not just about tracking the market—it's about actively shaping your financial future.