- Russian equity markets down +10%
- Ruble falls 3%
- WTI crude up $2.88 to $93.95
- S&P 500 futures close 54 points lower
- CHF leads, CAD lags
This would have been a wild day of trading if not for the US (and Canadian) holiday.
Late yesterday there appeared to be a diplomatic path forward due to talk about a Biden-Putin summit but it very quickly became clear that wasn’t going to happen. Instead, the temperature continued to rise and a meeting of Russia’s security council was broadcast with virtually everyone urging Putin to declare Donbas regions independent.
The meeting ended on a cliffhanger but Putin held a speech later. During the speech he was hitting hard. The rhetoric was much more intense than expected and that caused some jitters, with USD/RUB hitting above 80.00 on momentary fears that he was about to announce a wholesale invasion.
Ultimately, he stuck to the baseline and declared the regions independent. We later learned the lines would be drawn where the separatists currently control (not the entire regions). That hasn’t led to much relief yet but so far the talk on sanctions is light. We will wait to see how Ukraine reacts.
Ultimately, it might be the comments from Bowman that leave a larger dent in markets. The core of the Fed appeared to be coordinating efforts to play down the possibility of a 50 bps rate hike but a governor just torpedoed that. She didn’t tip her hand but it looks like we will go into the March decision not knowing which way it will go.