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Oil Shock, Crude Surges 20%, Treasuries Untouched: One Is Wrong, Which One?

Summary:
In the wake of the attack on Saudi Arabia, crude futures jumped as much as 20%. Treasury yields are flat. One is wrong! Oil Futures Up 20% The Financial Times reports Oil prices jump 20% After Attacks Halve Saudi Output. This is in the wake of a Saudi Oilfield Attack over the weekend. Questions Abound By Yemen, Iraq, or Iran? Israel? Production Back Up When? See the above link for discussion. Treasury Yield Flat Meanwhile, I note US Treasury yields are flat. As of 8:20 PM central Sunday evening, there is no change in 3-month, 5-year, 10-year, or 30-year treasury yields. Economic Sense I propose there is little economic sense to this reaction. Oil shocks are inherently recessionary. Theoretically, this could be an inflationary recession like the 1970s. But really? Global Fairy Godmother

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In the wake of the attack on Saudi Arabia, crude futures jumped as much as 20%. Treasury yields are flat. One is wrong!

Oil Futures Up 20%

The Financial Times reports Oil prices jump 20% After Attacks Halve Saudi Output.

This is in the wake of a Saudi Oilfield Attack over the weekend.

Questions Abound

By Yemen, Iraq, or Iran? Israel?

Production Back Up When?

See the above link for discussion.

Treasury Yield Flat

Meanwhile, I note US Treasury yields are flat.

As of 8:20 PM central Sunday evening, there is no change in 3-month, 5-year, 10-year, or 30-year treasury yields.

Economic Sense

I propose there is little economic sense to this reaction.

Oil shocks are inherently recessionary.

Theoretically, this could be an inflationary recession like the 1970s.

But really?

Global Fairy Godmother

With stocks priced well beyond perfection, a collapse in global trade, a UAW Trade Strike Involving 48,000 Workers, and trade war threats between the US and Europe (and the UK and Europe), this all seems strange.

Then again, perhaps the Global Fairy Godmother will solve all the issues and restore global inflation (as measured by central banks).

Mike "Mish" Shedlock

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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