Markets:
- Gold up $13 to $1873
- US 10-year yields up 4 bps to 1.98%
- WTI crude up $1.87 to $94.98
- S&P 500 down 15 points to 4403
- CAD leads, NZD lags
The name of the game this week is trading headlines around Ukraine. If that isn’t your cup of tea then you’re going to have a tough time. And if it is your cup of tea, you better be ready for anything. Today’s trading underscored the challenge.
It started in Europe with a Ukranian envoy saying the country might renounce NATO membership. That was later denied, including by the President. On Russia’s side, foreign min Lavrov appeared to open some doors to diplomacy with Putin saying ‘all right’ when he was told there was an opportunity. That boosted risk trades.
Or at least they did until Bullard doubled down on his comments about 100 bps of hikes by July 1. To be far, he said it sheepishly and deferred to Powell. Markets were slow to pick up on that but eventually the Bullard moves came out of most markets (with bonds as a big exception).
Then all hell broke loose on a pair of reports, the first one saying Russia’s troops were leaving meeting points and mobilizing and a second one from Zelenskyy himself who said they’d been informed the attack would start on Wednesday. Shortly after Zelenskyy’s office noted that his comment was sarcasm and that sent markets on somewhat of a u-turn.
The action was a bit more violent in stocks and oil than in FX. The yen rallied on the war headlines but came off aftewards. The euro has been struggling despite the risk-off tone. Part of that is the ECB walking back hawkish comments but there may also be a growth put going into Europe on potentially higher oil/gas prices on Russia-Ukraine war.
The loonie led the way with WTI topping $95 for the first time in seven years.