Crude oil is getting more expensive, bonds are rising, and European stock markets are bracing for a session of losses. The combination of expensive energy and rising borrowing costs is putting pressure on growth expectations and corporate earnings. Investors are adjusting their portfolios as the market digests the new macroeconomic scenario.
The technical pattern of crude oil and its impact on development 📉
From a technical analysis perspective, oil has broken through key resistance levels on the daily chart, surpassing levels not seen for weeks. This movement coincides with an increase in sovereign bond yields, creating a risk-averse scenario. The 50 and 200-period moving averages show divergences that suggest a technical correction in European indices. Traders are watching the Euro Stoxx 50 support levels around the 4,700-point zone, a level that could define the short-term trend.
The bond party, the uninvited guest 😅
And just when the investor thought the worst was expensive coffee, along come bonds and oil to remind them that the economy also knows how to raise the bill. Now it turns out borrowing costs more and filling up the car's tank is almost a luxury. If this continues, we'll soon be applying for mortgages in barrels of crude and paying for bread with public debt. Good thing summer is far away.