Risk is back off as Treasuries rally to the highs (and yields hit fresh lows at 2.4674%). USD/JPY is falling under pressure again.
There’s still no confirmation on who was behind the attack but speculation continues. We’ve just seen a report from Russia’s ITAR-TASS news agency that points to the possibility that the Ukrainian army was behind the attack:
A competent source cited objective control data as indicating that the Ukrainian army’s Buk air defense battalion had been moved to the Donetsk area on Wednesday, July 16. Another such battalion is getting ready for redeployment in Kharkov.
The source said aircraft flying at altitudes higher than 10,000 meters could be reached only by weapons like S-300 or Buk systems. The militia does not have and cannot have such weapons, the source said.
It doesn’t make sense that the Ukrainian army would be shooting down any planes because the rebels don’t have an airforce and the Ukranian government has total air superiority but this could be behind the latest fears.
Ultimately, I still think the rebels will take the blame whether they did it or not.