Economy

OIL SPIKE STRESSES ALREADY TEPID GDP PROSPECTS

1Q:22 GDP outlook was already flat before the Ukraine and oil price shock (crude up +43% YTD to $110 on 3/2) added further headwinds to an already fragile consumer.

A counter intuitive decline in rates reflected investors piling into safe-haven Treasuries when consensus looked for higher rates to combat inflation. A newly dovish Fed is likely to maintain/add liquidity given geopolitical risks, at least for the near-term, but at the risk of losing further control of prices.