Scary Week in Review
AHHHHHH!
Crude oil is over $90/barrel, stocks are diving, and treasury yields rose enough to push mortgage rates back above that elusive 6% threshold. Oh, and the economy lost 92,000 jobs in February (Anirban’s full post on that).
But hey, at least we’re supposed to hike our new global tariffs from 10% to 15% this week.
It wasn’t all gloom this week, but the bright spots are decidedly dim when viewed through the thickening fog of war.
Monday
ISM Manufacturing PMI
Manufacturing activity expanded in February, according to this survey of industry managers. That’s the second straight month of growth, which is good: manufacturing activity shrank in 37 of the previous 38 months.
That’s the good news. The bad—bordering on horrible—news is that the ISM Prices Index surged to the highest level since June 2022. As this respondent explained:
“Today, American produced commodities like steel and aluminum are the highest priced in the world, by far. Hence, the Section 232 tariff policy is having the exact opposite effect of their intention on an American manufacturer like us: It is raising prices while lowering demand and profitability.”
TSA Checkpoint Travel Numbers
Air travel remains in good shape, according to TSA data, but airfares are exceptionally exposed to the Iran conflict because a majority of Europe’s jet fuel travels through the Straight of Hormuz. While U.S. airfares are more insulated, it’s a global market, and the rising price of jet fuel will definitely push air travel prices higher.
Tuesday
Oil Stuff
Crude oil prices are, as of this morning, in the mid $80/barrel range, up more than $20/barrel from just a few weeks ago. This is due to the conflict in Iran as well as related factors like this morning’s news that Kuwait is cutting oil production.
So no surprise that EIA data shows that gas prices surged to $3.15/gallon for the week ending March 2nd, and more real-time data from GasBuddy shows prices up to $3.31/gallon as of this morning.
Diesel prices also jumped and are up to $3.90/gallon, with the more recent GasBuddy estimate showing prices are at $4.26/gallon as of this morning, the highest since November 2023.
What should you take from this? First: our prolonged period of low gas prices is definitely over.
Second: buckle up! The next few days could be absolutely wild in oil markets.
