Rising Brent Crude Prices Could Tighten US Interest Rates, Warn Economists
Portfolio Pulse from Piero Cingari
Brent crude oil prices are at their highest levels this year due to anticipated further reductions in oil output from major exporting countries. Saudi Arabia has hinted at more significant production cutbacks. Higher oil prices may lead to higher interest rates, especially in the U.S., to curtail inflation. Investors have responded by offloading government bonds, including 10-year Treasury bills, amid concerns that central banks will need to remain hawkish on interest rates. Energy-related companies have outperformed other sectors recently.
September 06, 2023 | 2:27 pm
News sentiment analysis
Sort by:
Ascending
NEGATIVE IMPACT
Investors are offloading government bonds, including 10-year Treasury bills, as tracked by US Treasury 10 Year Note ETF (NASDAQ:UTEN), amid concerns that central banks will need to remain hawkish on interest rates to counter the inflationary impact of rising energy prices.
The rising oil prices are causing concerns about inflation, which in turn is leading to expectations of higher interest rates. This is causing investors to offload government bonds, including those tracked by the US Treasury 10 Year Note ETF (UTEN), which is likely to negatively impact its price in the short term.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80
NEUTRAL IMPACT
The performance of the Energy Select Sector SPDR Fund (NYSE:XLE) has exceeded the Invesco QQQ Trust (NASDAQ:QQQ) of the Nasdaq 100 by more than double over the past three months.
While the Energy Select Sector SPDR Fund (XLE) has been outperforming due to rising oil prices, the Invesco QQQ Trust (QQQ) has not seen the same level of growth. However, as QQQ is a broad market ETF, it is not directly impacted by oil prices and its performance is influenced by a variety of factors.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
The performance of the Energy Select Sector SPDR Fund (NYSE:XLE) has outpaced the SPDR S&P 500 ETF Trust (NYSE:SPY) threefold over the past three months.
While the Energy Select Sector SPDR Fund (XLE) has been outperforming due to rising oil prices, the SPDR S&P 500 ETF Trust (SPY) has not seen the same level of growth. However, as SPY is a broad market ETF, it is not directly impacted by oil prices and its performance is influenced by a variety of factors.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
Energy-related companies have materially outperformed the rest of sectors recently. The Energy Select Sector SPDR Fund (NYSE:XLE) is up 15% over the past three months.
The rising oil prices are benefiting energy-related companies, which are outperforming other sectors. This is positively impacting the Energy Select Sector SPDR Fund (XLE), which has seen a significant increase in its price over the past three months.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90