ORLANDO, Florida, March 17 (Reuters) – Stocks rose, and bond yields and the dollar slipped on Tuesday, as investors shrugged off a rebound in oil prices that lifted Brent crude back above $100 a barrel, and turned their attention to the Federal Reserve’s interest rate decision on Wednesday.
In my column today I look at why Chinese President Xi Jinping goes into his summit with U.S. President Donald Trump with a stronger hand than he would have thought possible a few months ago. With Trump’s foreign policy agenda hogging the spotlight, China’s economic recovery has gone under the radar.
If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.
Today’s Key Market Moves
Today’s Talking Points
* Wall Street’s “exceptionalism”?
U.S. stocks’ outperformance since war in the Middle East broke out has been impressive. Compare and contrast: euro zone stocks are down 3%, UK stocks are down 4%, the Nikkei and Asia ex-Japan are down around 7%; the S&P 500 has lost less than 2% and the Nasdaq is almost flat.
Yet zoom out to January 1, and the picture flips on its head. So far this year: euro zone stocks are up 1%, UK stocks and the Nikkei are up 4%, and Asia ex-Japan is up around 7%; the S&P 500 has lost 2.5% and the Nasdaq is down 4.5%.
* U.S. fuel shock
Average U.S. gas prices at the pump are up 25% to just under or just over $4/gallon, depending on the survey, and diesel is now over $5/gallon. Jet fuel has jumped more than 50%, a rise that is sure to push the cost of air travel quite substantially.
So far, U.S. consumers have remained extremely resilient to the war-driven surge in fuel costs. But assuming they stay elevated for a while yet, they will bite. Perhaps this helps explain why the bond yield curve is flattening – once the initial inflation shock has passed, growth could slow sharply.
* Curves flatten everywhere
It’s not just the U.S. yield curve flattening. If you believe what yield curves signal about the future growth outlook, bond markets are warning that a slowdown is coming in many industrialized economies.
The German 2s/10s yield curve has been flattening since early February when it was around 80 bps. It recently compressed to 45 bps, the flattest in a year. Similarly, the UK yield curve was above 90 bps, the steepest since 2018, but is flattening now. And the Aussie curve, facing rising policy rates, is the flattest since December 2024.
What could move markets tomorrow?
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(Reporting by Jamie McGeever; Editing by Nia Williams)
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