A few minutes after the CBOT closes today, the Federal Reserve will announce an interest rate increase. The US markets have priced-in 75 to 100 basis point interest rate increase (¾ to 1%), up from a 50 to 75 basis point increase expected the past two months. The US stock market is now officially in a bear market as it is more than 20% below its all-time highs, down 23% to be more precise. Other than creating a negative economic attitude, a bear US stock market has little consequence for farm commodities, but a world-wide bear market, especially in Asia, will greatly reduce US exports. On the positive side, as money comes out of stocks, it needs a home. In times of inflation, commodities and the US dollar are a popular destination for money. On the negative side, a higher interest rate makes it more costly to store grain… to store anything and to buy on credit.
Russia has sold almost $100 billion worth of oil and gas since the war started. That is more than Russia has spent on the war effort. Russian forces are taking the city of Severodonetsk, the last remaining Ukrainian stronghold in the Donbas-Luhansk (Eastern) region. The question everyone wants to know:
After Severodonetsk is captured, what will Putin do?
He has said all he wants to do is “free” the Russian people in the Donbas-Luhansk region from Ukrainian Nazism and for Ukraine to promise it will never join NATO.
With the ruble continuing to firm against all currencies in the world, economically speaking, sanctions or no sanctions, Putin is in the driver’s seat. On March 20th, it took 121 rubles to buy a US dollar. Putin tied the value of the ruble to gold, unlike any other country in the world and forced buyers of Russian products to pay in rubles.