Ukrainian and Russian negotiators ended a third round of talks with little progress, while Ukraine’s military held fast along several fronts and Russia continued to shell cities and residential areas.
Russia’s invasion of Ukraine has dashed any hope U.S. consumers might have had for relief from sky-rocketing inflation, with gasoline prices in the last week surging by the most in nearly 17 years and costs of other goods like food ready to march higher as well.
Even before the invasion, the U.S. inflation report for February was set to show prices rising at their fastest pace in 40 years. The data, due to be released on Thursday, will likely show only a preliminary impact from the swelling in U.S. oil prices, which briefly climbed above $130 a barrel on Monday, but the spike is expected to drive overall inflation higher in coming months.
Fed Chair Jerome Powell said last week that the central bank will act cautiously given the uncertainty of the impact of the war in Ukraine, but persistently high inflation will weigh as policymakers sketch out their forecasts at their meeting for the path of rate hikes in the months ahead.
Real yields in the U.S. Treasury market have gone even more negative as inflation surged, which is typically viewed as a positive factor for stocks, but Russia’s invasion of Ukraine has placed more emphasis on shedding risk than on the possibility of getting higher returns on Wall Street.
The decline in benchmark U.S. real yields, which have been mainly below zero since 2019, suggested that investors are piling into TIPS because of concerns about high inflation. Indeed, the war has propelled global benchmark Brent crude futures to a roughly 14-year high of just under $140 per barrel.
Russia calls its actions in Ukraine a “special operation,” but the move has triggered sweeping sanctions by the United States and Europe that aim to isolate Russia to a degree never experienced by such a large economy.
Due to the uncertainty with the Russia – Ukraine situation, markets will be volatile. Where there is volatility, there is an opportunity to trade with careful analysis.
Plan your trades carefully!
This Week’s High Impact Events
The times below are GMT +2.
Tuesday 8th March
No High Impact Events
Wednesday 9th March
12.15 – Australia – RBA Gov. Lowe Speaks
Potential instruments to Trade: AUD Crosses.
17.00 – US – JOLTS Job Openings
Potential instruments to Trade: USD Crosses.
17.30 – US – Crude Oil Inventories
Potential instruments to Trade: USD Crosses.
20.01 – US – 10-Year Bond Auction
Potential instruments to Trade: USD Crosses.
Thursday 10th March
14.45 – Europe – Main Refinancing Rate & Monetary Policy Statement
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