STATE OF THE MARKETS
Stocks took a breather amid bonds sell-off. US stocks pared last week’s gains as markets continue to assess Fed’s rate hike and the Russia-Ukraine war. Dow (-0.58%), Nasdaq (-0.40%) and S&P (-0.04%) including Russell (-0.97%) edged lower as Dollar bulls tried to regain the 98.50 minor handle. Bonds were sold-off across the board, sending yields higher, with the 10Y benchmark spiked to 230 basis points – the highest in more than two and half years.
In the commodities market, fear of a prolonged Russia-Ukraine conflict sent major commodities higher. Crude is approaching $111.20/bl at writing while gold was well defended at $1920/oz. Elsewhere, iron ore was little changed at $150/tn.
In the FX space, the comdolls trio continue to lead the demand in medium to long term accounts while Aussie and Kiwi pulled back to offers in the short term. Loonie spiked to the helm of demand as crude continued to float above the $100/bl figure. Overall sentiments seemed bullish as the safe-haven Yen and Swiss remained on offers across the horizons.
On Tuesday, markets hope for new development in the Russia-Ukraine peace talks while waiting for earnings reports from Adobe (ADBE), Carnival (CCL), GDS Holding (GDS), PagSeguro Digital (PAGS), Worthington Industries (WOR), and SnapOne (SNPO) as well as the latest figure on Fed manufacturing index.
OUR PICK – XAG/USD
Prolonged war may further boost commodities. Inflation and prolonged Russia-Ukraine conflict is now on the way of pushing prices higher. Feds recent hike of 25bps would prove not enough to contain the rising prices stemmed from the war effect. However, in the long run, Feds doing more hikes risk to dent demand for the non-interest bearing metals, unless the war gets uglier.
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