Morning Brew February 25 2022
Senior Relationship Manager
Summary: Mild Western Response Calms Markets
Markets stabilized yesterday after western sanctions against Russia came less severe than feared and the initial sell of was taken as an opportunity to buy the dip. US Equities closed green with the Dow up 0.3%, S&P 500 up 1.5%, Nasdaq up 3.3%. Over night they are giving up some of the gains again, futures are a little more than 0.5% below the close. Dax traded as low as 13800 yesterday but could recover along with US Indexes and is currently at 14250.
Sanctions so far do not exclude Russia from the SWIFT system or prohibit natural gas sales completely.
EURUSD is at 1.1200 and GBPUSD at 1.3414, Bitcoin could recover from 34k to 38k again.
Gold rose to a high of 1973 and Silver hit 25.60 before retreating to currently 19149 and 24.46,
Oil traded as high as 100 yesterday and retreated to 95.
Today all eyes will be focused on developments in Ukraine and western reactions. Trade carefully and balance risk reward. Any comments on of central banks on the war, it`s impact on inflation and their view will be watched closely.
In the afternoon we are expecting expiries in many futures contracts, pls monitor your positions.
Comment by Althea on Fixed Income:
The bond market is signaling that the recent invasion of Ukraine will bring higher inflation and slower growth, increasing stagflation probabilities. Meanwhile, the cost to insure Russian bonds has risen to the highest since the 2008 global financial crisis, weighing on emerging markets' cost of funding, particularly in hard currency. Escalation of tensions in Eastern Europe challenges the corporate bond space on both sides of the Atlantic as credit spreads widen to the highest level since the 2020 pandemic.
Physically Settled Futures:
STFH2 will expire 25th February at 02:00 GMT.
EMAH2 will expire 25th February at 10:00 GMT.
HGH2, KEH2, RRH2, SIH2, SILH2, TNH2, UBH2, XCH2, XKH2, XWH2, ZBH2, ZCH2, ZFH2, ZLH2, ZMH2, ZNH2, ZSH2, ZTH2, ZWH2 will expire 25th February at 16:00 GMT.
Key Events this Week:
Friday: German GDP, EU Consumer Confidence, Durable Goods Orders
Saturday: Berkershire Hathaway.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.