Absorbing the shock
February 28, 2022
Feb 24 highs (Thursday invasion) vs this morning indicate that markets have absorbed the main shock of Putin putting nuclear forces on alert and are adjusting relatively easily.
high on 2/24 high today
CLJ2 100.54 99.10
TYM2 127-115 127-125
EDZ2 98.20 98.215
GCJ2 1976.50 1935.20
ESH2 4101.75 4251.50 (these are relative lows)
EUR 1.1106 1.1122
RUB 89.99 117.93
Interest rate futures made slight new highs. ESH low is significantly higher than last week’s. The high in gold is significantly lower. The primary change is in the Ruble, which has been crushed, leading to capital controls and a punitive increase in rates, but spillover effects appear contained. Russia appears isolated in terms of economic impact for now.
–Tomorrow is the State of the Union. Wednesday begins Powell’s semi-annual testimony. Last print I see on FFJ2 is 9963.5 which indicates 25 bps only at the March 16 FOMC. The curve should steepen as rate hikes are stretched out a bit farther and slower.
