- Oil tumbles on recessionary fears
- Gold struggles as yields push higher
- Bitcoin recaptures $29,000
Oil
Crude prices just saw all of its gains from the OPEC+ surprise production cut erased as the macro backdrop has become a disaster. Oil has been in freefall over a challenging economic environment, banking jitters, disappointment with China’s reopening, fears of overtightening by the Fed, and on expectation Permian basin production has yet to peak.
WTI crude pared losses after a bullish EIA report showed gasoline demand roared back. The economy is weakening but it isn’t falling off a cliff, so we shouldn’t be seeing oil trade near the low $70s.
China’s recovery is not materializing, and US demand is weaker, so $100 oil won’t be happening.
Gold
Gold prices initially rallied as banking worries return to the front burner and as Fed rate hike odds continue to evaporate. It looks like gold’s best friend is a little bit of financial stress as that has helped swaps no longer fully price in a rate hike by mid-year. Gold got its groove back and unless First Republic is miraculous saved and we don’t see any immediate stress on other midsized banks, the precious metal could make a run towards record highs.
Gold turned negative as yields turned positive as investors realized the banking crisis was likely contained and the focus will shift back to inflation.
Bitcoin
Banking jitters have revitalized life back into cryptos. Bitcoin is surging and so are all the major cryptos as banking stress supports the use case for digital assets. Bitcoin is still facing a ton of resistance and this current rally will likely struggle until we get a clearer regulatory framework for cryptos.