Stocks drop, bonds climb amid geopolitical risks
BNN Bloomberg
Treasuries climbed, with traders abandoning their bets on a half-point Federal Reserve hike this month as they assess mounting risks to the economic outlook amid geopolitical uncertainties. Stocks fluctuated.
Stocks fell as investors assessed the risks to the global economic outlook amid geopolitical uncertainties. Treasuries climbed, with traders abandoning their bets on a half-point Federal Reserve hike this month.
The S&P 500 dropped for a second day amid losses in financial and industrial shares, while the technology-heavy Nasdaq 100 advanced. Bonds rallied across the curve, led by short-dated tenors, with swaps linked to the Fed’s March 16 meeting pricing in 24.5 basis points of tightening. Traders are having to pay the most since the March 2020 liquidity crisis to protect against a deeper drop in Treasury yields. Demand continued to rise for option structures hedging potential scenarios where 10-year yields slip to as low as 1.55 per cent by the end of March -- about 20 basis points below current levels. Oil jumped.
Comments:
Given the heightened uncertainty surrounding Ukraine, a half-point Fed hike “would simply be too aggressive at the moment,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman.
As penalties against Russia continued, the European Union identified seven Russian banks it’s considering excluding from the SWIFT messaging system. The nation banned residents from transferring hard currency abroad as President Vladimir Putin sought to counter the fresh sanctions walloping the economy. The European Union and Switzerland approved measures against some of Russia’s wealthiest tycoons, and Britain told ports not to service Russian-flagged vessels.
President Joe Biden delivers his State of the Union speech at 9 p.m. in Washington. Not since 2003, when George W. Bush laid out his case for war against Iraq, or 2010, when Barack Obama was confronting the financial crisis, has a U.S. leader delivered his annual address to Congress in such a fraught moment.
