Bonds recover and stocks fall due to conflicts between Russia and Ukraine

Equity markets are almost all trading lower, while sovereign bonds, which were headed for a path of record losses, showed a recovery. In recent sessions, signs of monetary tightening are stronger than expected and have mainly weighed on the bond market.

However, this morning the 10-year US Treasury premiums fell to 2.38%, after reaching highs not seen since mid-2019. Oil, for its part, operates in a real swing and remains at levels historically high – the WTl was quoted around US$ 112 per barrel. The volatility is directly related to the war from Russia on Ukraine and with the decisions of European leaders on the suspension or not of Russian oil.

Between the speeches of the leaders of the central banks and the indicators that will reflect the first impacts, direct or indirect, of the warinvestors will have a lot to evaluate.

In recent sessions, the stock markets have shown some complacency about the news related to the war, inflation and monetary tightening. However, the battery of data that is about to come to light will test investors’ acceptance of risk.

inflation and growth

The pronouncements of various members of central banks may give clues – or even create noise – about the pace of global economic expansion. Several monetary authorities, including the Federal Reserve (Fed), have declared that inflation is their main enemy and they are willing to do anything to tame it. Investors are wondering: will higher interest rates be too bitter a medicine for economic expansion?

war effects

In addition, the indicators that are about to come out should expose the first impacts of the war in the economy and the perception of consumers and businesses.

The first data this morning was UK inflation: it spiked again to 6.2% in February from 5.5% in January. This is the highest annual rate in the last 30 years.

There are also big expectations surrounding Eurozone sentiment indicators (German ZEW tumbled last week) and PMIs from various parts of the world due tomorrow.