Bond yields are rising again, signaling that inflation isn't going away anytime soon. Investors are worried that the Federal Reserve's target of 2% inflation is unrealistic, leading to falling bond values.
Experts advise caution in the bond market, especially with long-term and risky investments. The front part of the curve, like 2-year Treasuries, is considered safer.
Geopolitical tensions are also playing a role, as rising commodity prices add to inflation concerns.
The World Trade Organization predicts global trade will rise 2.6% in 2024 after a 1.2% drop in 2023. This is expected due to lower inflation and interest rates. Despite this, geopolitical tensions, particularly between the US and China, could disrupt trade. The WTO also observed increasing trade fragmentation along political lines, with trade growth between opposing blocks being slower than within them.
Oil prices have hit their highest point in five months due to geopolitical tensions and increased demand from manufacturing and cold weather. The US is contributing to supply concerns as a larger exporter, but some analysts believe the surge may not last. They suggest that historical market resilience and US production increases could lead to price declines. However, speculative activity may also be driving up prices, and gasoline prices are rising as well, potentially impacting consumer demand.
As global tensions flare, China continues to woo foreign investors. U.S. business leaders recently met with President Xi Jinping to discuss investments, amidst challenges such as geopolitical uncertainties and slower economic growth. The Chinese government has eased data export restrictions and organized the "Invest in China Summit" to attract capital. However, concerns about geopolitical tensions and the country's ambitious growth target of 5% remain.
