BlackRock Investment Institute has raised its allocations to US short-term government bonds and other emerging-market securities, reducing its exposure to investment-grade credit accordingly. This move reflects expectations that the Fed may need to become more aggressive in tackling inflation, with emerging markets currently more attractive due to China's recovery and a weaker U.S. dollar. Wednesday's release of minutes from the Fed's January-February meeting will indicate how much further rates may rise.

EQUITY

Wall Street had its worst day of the year due to concerns over sticky inflation. The S&P 500, Nasdaq Composite, and Dow Jones all closed lower. Big tech stocks and the semiconductor index were hit the hardest, while Walmart beat earnings expectations by a wide margin. Coincidentally, the upcoming focus on earnings will be the semiconductor giant, Nvidia. Although the 10-year treasury yield is rising, so is the 1-year yield, which has reached 22-year highs as smart money abandons bonds.

GOLD

Gold prices remained steady above a six-week low as the market waited for the meeting minutes of the Fed's upcoming March meeting and the PCE Index reading, which is the Fed's preferred inflation gauge. Stronger-than-expected U.S. economic data, including PMIs, and signs of resilience in the U.S. economy provide the Fed with enough room to keep raising interest rates, which bodes poorly for gold.

OIL

The same situation applies to the oil market as it looms above its 3-day low, while demand for gas is reported to be lower than expected in the European market. The heavily sanctioned Russia has called for the UN Security Council to discuss its incidents with Nord Stream 1 and 2, which an investigative journalist claims to have been perpetrated by the White House.

CURRENCY

The US dollar rose 0.32% due to strong economic data but fell against the pound. An unexpected bounce in PMI data showed strength in business activity for both the US and UK economies. The Federal Reserve is likely to be cautious about rate hikes, and the medium-term direction for the USD will depend on relative growth paths.