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Don't be an April Fool

The first few days of April have been next to silent on the various issues that caused high volatility in the markets during March month. But does that mean markets all over have priced in the worst and that from here on things will be smooth?


The answer to that is full of disappointment and it is a big No. The reasons are visible enough but due to certain short-term factors, their visibility of them is low.


To start with, this month does not contain much of Fed Speaker events and the only major-related event is today as the last FOMC meeting minutes are released. This results in less movement or volatility in the rate hike odds. In addition to this USA bonds, 2 year and 10-year yields have inverse and it is a leading indicator of the recession that is expected to occur in 2023 but has the possibility of happening sooner.


On the geopolitical front, Russia has withdrawn its military from certain parts of Ukraine and there are continuous talks between the two nations that can form some kind of an agreement. This has kept incremental pressure from such news on the low end.


Commodity prices are currently stable at a higher band but as China continues with covid related restrictions there are issues with near-term demand projections. In addition to it, London Mercantile Exchange has recorded a pause in the inventory levels that were seeing major reductions last month.


All of these factors have brought much-needed relief to financial markets but what looks like a bottom would most certainly be a near-term bounce trapping the optimists by end of this month or next month starts as volatility returns and factors become visible.

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