- Signs continue to emerge that China is inclined to protect Russia
- US warns of 'significant consequences' if China violates Russia sactions
- EU member states approve fourth round of sanctions against Russian oligarch and entities
- Senator Manchin may have doomed Sarah Bloom Raskin's Fed bid
- NY Fed survey: One-year inflation expectations +6.0% vs 5.8% prior
- Ukraine negotiator says Russian talks are paused until tomorrow
- EU pushed to adjust sanctions to ensure EU can still buy oil from Russia - report
- Zelensky to address US Congress on Wednesday
- Kremlin: All Russian plans in Ukraine will be fulfilled and in the time frames outlined
Markets:
- Gold down $34 to $1951
- US 10-year yields up 14 bps to 2.15%
- WTI crude oil down $7.38 to $101.98
- S&P 500 down 18 points to 4183
The price action was more of a story than the headline to start the week. Early in US trade, equity futures were positive and the mood was good. The yen was weak to go along with that theme but the FX market was showing some cracks as AUD led commodity currencies modestly lower. Alone, that wasn't necessarily telling because the 'peace' trade is commodity-negative but it later proved to be a foreshadowing trouble.
Two things really tipped the scales, the first was a fresh push higher in bond yields. It's Fed week and there's real fear about Powell teeing up a faster pace of rate hikes for the May 4 meeting. Today's NY Fed survey showed a step-up in longer term inflation expectations and the Fed may feel the need to recalibrate.
In tandem with that, tech continues to bust. The positive open was quickly erased and tech led another selloff in China and the US. The Nasdaq closed below the recent intraday low.
With that, commodity currencies got hit from the commodity trade and the risk aversion trade. AUD/USD was down 90 pips to 0.7200 and USD/CAD rose above 1.28. Both finished at the extremes and oil was crushed but did show a hint of life in the latter half of the day.
Cable has sometimes trade tight with risk and other times tight with the Ukraine trade but even with some ceasefire optimism, it could hold up today, slipping to 1.3000 from as high as 1.3075.
Meanwhile, there's no bid for the yen on risk aversion as global bond yields continue to move higher. Even with falling commodity prices and risk aversion, NZD/JPY was able to finish the day higher.
