- Zelensky: Ukraine prepared for certain compromises
- Zelensky deputy chief of staff: We are ready for a diplomatic solution
- Russia not in the mood to compromise on Ukraine peace talks - report
- January JOLTS US job openings 11.263m vs 10.925m expected
- US considers sanctions on Russian nuclear power supplier Rosatom
- White House warns of high CPI inflation tomorrow
- US 10-year note auction 1.920% vs 1.9170% WI
- US weekly EIA oil inventories -1900K vs -657K expected
- Russia ruling party says has taken first step to nationalizing property of foreign firms
Markets:
- S&P 500 up 106 points to 4276, or 2.5%
- WTI crude oil down $13.59 to $110.11
- US 10-year yields up 7 bps to 1.94%
- Gold down $60 to $1991
- EUR leads, CAD lags
The second day of talk in a row about compromise from Ukraine kicked off a much better mood about the war and markets. Many of the big moves since the start of hostilities unwound, some in major ways.
We're always going to cheer on peace but there isn't much meat on the bones of the headlines here. Ukraine is talking about compromise but has some strong red lines; Russia isn't talking about compromise at all and the late headlines indicating that took a slight bit of the enthusiasm out of markets.
At the same time, the market could be sensing that the sanctions pendulum has swung as far as it will go. Germany appears to have drawn a line at further energy sanctions or military aid like fighter planes. The headline to watch in the day or so ahead will be a Russian list of export controls. There's a risk they cut off energy exports to the EU and other 'unfriendly nations'.
In the war itself, there were some efforts at a humanitarian ceasefire in various parts of the country but success was spotty.
A few headlines on oil hit particularly hard, leading to a massive $23 high-to-low drop in WTI. We've since bounced $7 from the lows and holding around $110. Gold also gave back all of yesterday's gains.
In FX, the euro has been the loser among major currencies on the war but it bounced today, rising 165 pips to 1.1065. The initial move stalled at 1.10 but a fresh push took it well above.
Aside from that it was a straight-forward optimistic rebound. The hard part will be sustaining the momentum and because it will require better news on the ground. That said, the best rallies are built on skepticism.
