Oil is back to $121 a barrel after the European Union has agreed on sanctions on Russian oil imports. Secondly, at the margin, it seems like some of the restrictions in China, since cases are starting to tick lower, are starting to go. Therefore, increased prospects of Chinese demand coming back into the oil markets is keeping oil pretty strong. It is not very far from the $124 per barrel, which was the high on March 24.

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The equity market seems to be trading narratives and it doesn't take very much for the narrative to change. For the last couple of months it was inflation, Fed tightening, then over the last fortnight it became about growth fears, maybe a Fed pause, and flipped once again - not conclusively, maybe.

One of the FOMC voting members, Christopher Waller, a Member, the Fed Board of Governors, is hawkish and focused on inflation. He said, “I support tightening policy by another 50 basis points (bps) for several meetings, in particular, I'm not taking 50 bps hikes off the table until I see inflation coming down closer to what 2 percent target. By the end of this year, I support having the policy rate at a level above neutral.”

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Moreover, Wall Street Journal (WSJ) has published an op-ed ‘My Plan for Fighting Inflation’ by US President Joe Biden. It shows that even from the US administration and government perspective, tackling inflation is a priority. Biden agrees with Fed’s assessment that “Fighting inflation is our top economic challenge right now”.

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The op-ed in WSJ gives a fair idea that it's all going to be about inflation and ways to tackle inflation, which makes it clear that the Fed has got complete support from the US government.

Watch the accompanying video of CNBC-TV18’s Prashant Nair for more details.

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First Published:May 31, 2022 8:44 AM IST