Market Quick Take - February 14, 2022 Market Quick Take - February 14, 2022 Market Quick Take - February 14, 2022

Market Quick Take - February 14, 2022

Macro 6 minutes to read
Saxo Strategy Team

Summary:  Markets were spooked on Friday by US intelligence sources warning of an imminent Russian invasion of Ukraine. This triggered position squaring in risky assets as stocks moved and closed sharply lower and safety seeking in US treasuries, the US dollar, and especially the Japanese yen. Oil spiked to fresh new highs with gold jumping as well. Headline risks from this issue will likely continue to dog markets until signs of an easing of tensions are firmly in place. Meanwhile, markets were already roiled by high US inflation data last week, and the intense focus on the next Fed steps will continue this week

What is our trading focus?

Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) - US equities were trying to fight back on Friday despite all of the fresh pricing of a steeper pace of Fed rate hikes late last week, when the US warnings on a possible Russian invasion of Ukraine spooked risk sentiment late in the session, seeing a sharp sell-off in the close. The key indices remain in limbo technically between important resistance at the 200-day moving average in the Nasdaq 100 just above 15,000 and pivotal support near 14,000, while similar levels for the S&P 500 index are 4,585 top the upside and the 4,300 area to the downside. Markets will likely prove jumpy on headline risks for everything Russia-Ukraine related after Friday’s move.

Hang Seng (HK50.I) - It was a risk-off session in Hong Kong (Hang Seng -1.25%) and China A-Shares (CSI 300 -0.45%) by mid-day.  Selling was across-the-board. As suggested in Saxo’s Q1 2022 outlook, upstream energy stocks are having strong tailwind in an environment of high inflation, supply deficits, lack of capex and heightened geopolitical tension. PetroChina (857.HK) and CNOOC (883.HK) rose 3.14% and 1.51% respectively. In its monetary policy report released last Friday, the PBoC emphasized ensuring steady growth in aggregate financing and guiding financial institutions to provide support to key industries and weak links of the economy. All 31 provinces, municipalities, and autonomous regions in China have released their 2022 GDP growth targets. Most of them are above 5.5% and nine of them target at above 7%. Overall, targets are set at levels below the actual growth rate in 2021.

US dollar pairs – the US dollar did see some strengthening in the wake of the hot US CPI data last week, together with St. Louis Fed president Bullard’s musings on the Fed needing to hike 100 basis points before mid-year, but the move was modest relative to the sharp Fed repricing, suggesting a difficult path higher for the greenback merely from repricing Fed expectations. The US warnings on a possible imminent invasion of Ukraine late Friday demonstrated that the US dollar remains a safe haven currency for now, although playing second fiddle to the Japanese yen, which outperformed as bond yields dropped on Friday.

USDJPY and JPY crosses – the action Friday showed clearly once again that the JPY is the most sensitive currency to safe haven seeking when a deleveraging wave hits markets like it did on Friday. As US longer treasury yields absorbed a sudden bid, so did the JPY, with the move coming just after the Bank of Japan announced that it would buy “unlimited” amounts of 10-year JGB’s in today’s auctions on Friday to defend its 0.25% cap on 10-year Japanese Government Bond yields after this level was nearly tested last week. With yields pushing lower elsewhere, this avoids any pressure on the Japanese currency. As the source of the concern (Russia-Ukraine) is contiguous to Europe and the market has recently seen the ECB guidance that it will revise its policy outlook at the March meeting as hawkish, the correction in EURJPY was particularly brutal. In the near term, the JPY is likely to trade as a proxy for “risk-on, risk-off" behaviour, while longer term the direction of global sovereign yields will be an important coincident indicator to watch (higher yields=weaker JPY and vice versa).

Crude oil (OILUSMAR22 & OILUKAPR22) stayed bid in Asia after geopolitical tensions over Ukraine boiled over on Friday. Over the weekend, talks between Biden and Putin failed to calm tensions with the market worried about the impact on global supplies should exports from one of the world's largest exporters be impacted by the conflict. Oil spreads remain severely backwardated on supply concerns with physical Brent barrels on Friday trading more than two dollars above the front month futures contract. Apart from following developments in Ukraine, the market will also be watching a potential response from the other major oil producers with oil near $100 may threaten the global economy. 

Gold (XAUUSD) jumped on Friday as worries about a Russian attack on Ukraine boiled over. While a safe-haven jump usually tends to be short lived, unless an escalation is seen, gold may find some additional support from macro-economic developments with oil near $100 keeping inflation elevated for longer while at the same time hurting global growth thereby potentially reducing the number of future rate hikes. US consumer sentiment took a knock last month (see below). Gold reached a $1865 high on Friday before drifting lower overnight. For the rally to have further legs to go on support now needs to be established ahead of $1835 while resistance above $1865 is the November high at $1877.

US Treasuries (TLT, IEF). The US yield curve steepened slightly on Friday as the White House warned that a Russian attack on Ukraine could happen any day. Ten-yield yields fell below 2%, and 2-year yields dropped below 1.5%. However, a war in Ukraine translates into sanctions against Russia, further increasing energy prices adding worries to inflationary pressure. Therefore, the Federal Reserve might need to be more aggressive into hiking interest rates. Such a scenario would translate into an inevitable inversion on the yield curve as long-term yields will be compressed by war in Ukraine, and the front part of the yield curve will continue to rise to reflect rate hikes expectations. This week’s focus is on Wednesday’s FOMC minutes and Fed’s speakers, many of which are ghosting members this year.

UK Gilts (IGLT). Jobs figures, inflation data and retail sales numbers are all released this week. The focus is whether they can increase the aggressiveness of the BOE. Currently the market is pricing 130bps of rate hikes this year, below the 165bps markets are pricing in the US. As the markets adjusts to the new hawkish positions I the Fed and the ECB, Gilts yields might resume their rise. The yield curve is likely to continue to bear-flatten, while shifting higher.

European sovereigns (VGEA). In the European sovereign space, the focus is going to be on geopolitical tensions. Olaf Scholz is in Kyiv today and tomorrow in Moscow. Also, ECB’s Lagarde will speak this afternoon. The market is going to focus on the BTP-Bund spread and any clue of interest rate hikes for this year.

What is going on?

US warnings on Russian invasion of Ukraine spook market Friday – stern warnings from US intelligence sources of a Russian invasion of Ukraine that could start this week triggered a sharp deleveraging move late on Friday, with that saw investors squaring positions and seeking safety in sovereign bonds, the US dollar and even more so the Japanese yen, and dumping stocks. The Russian ruble spiked lower. The markets remain in a nervous mood in Monday’s early trading as many markets trade near Friday’s closing levels. Russia has denied any plans to invade. Talks between Russian president Putin and US President Biden brought no apparent change to the temperature as we await developments.

U.S. consumer sentiment falls to a fresh decade low on inflation. The University of Michigan gauge slumped to 61.7 in February (preliminary report) versus 67.0 expected and 67.2 in January. Both the current conditions and the expectations deteriorated, at 68.5 and 57.4, respectively. The report indicates: “the recent declines have been driven by weakening personal financial prospects, largely due to rising inflation, less confidence in the government's economic policies, and the least favorable long term economic outlook in a decade”. Long-term inflation expectations, which are closely monitored by the market, remain anchored at 3.1 %, unchanged from January’s level. But the one-year inflation expectations continue to rise, at 5.0 % versus prior 4.9 %. This is the highest level since July 2008. The inflation headache will not disappear anytime soon in the United States.

Russia’s importance as a major supplier of commodities to the global economy was exposed on Friday when tensions over Russia’s military buildup near Ukraine boiled over, thereby raising the risk of supply disruptions. Russia’s exports as a share of global production are below 5% for silver, copper, coal and aluminum, between 5% and 10% for wheat, nickel, gas, oil and gold while above for platinum and not least palladium where the figure is close to 45%.

What are we watching next?

Russia-Ukraine headlines. These can emerge from anywhere, with the recent US warnings on the likelihood of a Russian invasion of Ukraine sounding increasingly shrill, while Russia has denied any intents to do so.  German Chancellor Scholz will travel to Kyiv today and will meet with Russian president Putin tomorrow in Moscow.

Watching next signals from the Fed – after another multi-decade highs in the US CPI data series last week and hawkish talk from FOMC voter Bullard, many are speculating that the Fed could move to hike rates between meetings for the first time since 1994, though the subsequent nervousness triggered by Russia-Ukraine concerns has seen Fed tightening expectations adjusted somewhat lower. The market was pricing as high as 46 basis points of rate hikes through the March 16 FOMC meeting on Friday before this dropped to under 40 basis points, Still, if the Fed fails to hike rates 50 basis points by then (whether a surprise 25 bps hike between meetings followed by another 25-bps hike at the March meeting or 50 bps all at once at the meeting) would be seen as dovish relative to expectations, something the Fed is unlikely to want to deliver. This week’s Fed calendar includes Bullard out speaking in a TV interview today, the minutes of the last FOMC meeting up on Wednesday, and voters Bullard and Mester out speaking on Thursday, and voter Williams speaking on Friday.

Earnings Watch. Earnings season rolls on this week, with a number of interesting names on the docket for the week ahead, including mining giant BHP up Tuesday, two big semi-conductor names Applied Materials and NVidia, US retail giant Walmart, which may offer interesting comments on the state of the US consumer, and US agricultural machinery specialist Deere at the end of the week.

  • Monday: DBS Group, United Overseas Bank, Arista Networks
  • Tuesday: BHP Group, TC Energy, Glencore, Alcon, Airbnb, Zoetis, Marriott International, Roblox
  • Wednesday: CSL, Fortescue Metals, Shopify, Nutrien, Barrick Gold, Genmab, Air Liquide, Heineken, Nvidia, Alibaba, Cisco, Applied Materials, AIG, Hilton Worldwide, Trade Desk, DoorDash, Albemarle
  • Thursday: Wesfarmers, Telstra, Airbus, Schneider Electric, Kering, Eni, Reckitt Benckiser, Repsol, Nestle, Walmart, Southern, Baidu, Palantir Technologies, Roku
  • Friday: Hermes International, EDF, Allianz, Sika, Deere

Economic calendar highlights for today (times GMT)

  • 0800 – Czechia Jan. CPI
  • 0900 – Switzerland SNB weekly sight deposits
  • 1330 – US Fed’s Bullard to speak in TV interview.
  • 1615 – ECB President Lagarde to speak
  • 2350 – Japan Q4 GDP Estimate
  • 0030 – Australia RBA meeting minutes
  • 0120 – China Rate Decision

Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app:

Apple Sportify Soundcloud Stitcher


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank (Schweiz) AG
The Circle 38

Contact Saxo

Select region


All trading carries risk. Losses can exceed deposits on margin products. You should consider whether you understand how our products work and whether you can afford to take the high risk of losing your money. To help you understand the risks involved we have put together a general Risk Warning series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. The KIDs can be accessed within the trading platform. Please note that the full prospectus can be obtained free of charge from Saxo Bank (Switzerland) ltd. or the issuer.

This website can be accessed worldwide however the information on the website is related to Saxo Bank (Switzerland) Ltd. All clients will directly engage with Saxo Bank (Switzerland) Ltd. and all client agreements will be entered into with Saxo Bank (Switzerland) Ltd. and thus governed by Swiss Law.

The content of this website represents marketing material and has not been notified or submitted to any supervisory authority.

If you contact Saxo Bank (Switzerland) Ltd. or visit this website, you acknowledge and agree that any data that you transmit to Saxo Bank (Switzerland) Ltd., either through this website, by telephone or by any other means of communication (e.g. e-mail), may be collected or recorded and transferred to other Saxo Bank Group companies or third parties in Switzerland or abroad and may be stored or otherwise processed by them or Saxo Bank (Switzerland) Ltd. You release Saxo Bank (Switzerland) Ltd. from its obligations under Swiss banking and securities dealer secrecies and, to the extent permitted by law, data protection laws as well as other laws and obligations to protect privacy. Saxo Bank (Switzerland) Ltd. has implemented appropriate technical and organizational measures to protect data from unauthorized processing and disclosure and applies appropriate safeguards to guarantee adequate protection of such data.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc.