- Gold down $10 to $1898
- WTI crude oil up 98-cents to $93.07
- US 10-year yields down 1 bps to 1.965%
- S&P 500 up 63 points to 4288
- JPY leads, CAD lags
It was a harrowing day in the world and global markets. Intense fear and a flight to safety 18 hours ago turned into risk taking later in the day as sanctions were announced.
The market was fearful of cutting off Russian commodity exports and sparking global shortages and inflation. As the US and UK sanctions were announced, it became clear that wouldn’t be the case. Russia’s banks and some oligarchs were targeted but nothing that will materially slow the global economy.
At the same time, a pair of ECB officials — including a hawk — indicated that they would be likely to delay ending QE until year end (rather than Sept). That set the stage for a dovish-lean in markets and tech stocks rallied.
As sad as it is, this is all the support that Ukraine is getting. They’ll be left to fight off Russia alone and while the rest of the world continues to buy Russian exports.
How the battle goes could determine what comes next in a number of markets. At this point, a short war or some kind of negotiated peace would be ideal. We also await the Russian sanctions response, which could include it holding back supplies of exports; so that remains a risk.
Notably, the most-extreme FX moves were into the London fix and we saw turnarounds afterwards. Keep an eye on the clock in the day ahead for similar moves.