Headlines:
- von der Leyen: A first package of sanctions will be tabled at EU meeting later today
- UK PM spokesman: More Russian sanctions ready should there be further aggression
- EU reportedly discussing ban of trade in Russian state bonds
- Kremlin says decision on sending forces into Donbass depends on how the situation develops
- Zelensky: We believe there will be no war against Ukraine and no wide escalation
- EU sanctions may be limited, as a response to eastern Ukraine situation - official
- Russian central bank says ready to take all measures to support financial stability
- UK's Javid: We will be introducing sanctions on Russia
- BOE's Ramsden: I do not envisage bank rate rising to anything of around 5% level
- Germany February Ifo business climate index 98.9 vs 96.5 expected
Markets:
- NZD leads, CHF lags on the day
- European equities mildly lower; S&P 500 futures flat
- US 10-year yields up 1.3 bps to 1.94%
- Gold down 0.5% to $1,896
- WTI crude up 3.7% to $94.43
- Bitcoin up 1.5% to $37,635
The session started with a grim tone as the market was making up its mind on the whole Russia-Ukraine situation, awaiting fresh sanctions from the West. European indices were marked sharply lower at the open but recovered some poise before the real turn came after Ukrainian president Zelensky said that there will be no war with Russia.
That helped to see US futures turn around heavy losses (S&P 500 futures were down 1.8%) into a brief venture into positive territory but overall, risk trades are much improved on the session. European stocks are also little changed now on the day.
The mood is also largely helped by the "slap on the wrist" sanctions being talked up by the EU and UK. The whole narrative is built upon the notion that they are seeing the latest developments as still not being an "invasion" by Russia, so you get the point.
Treasury yields also rebounded strongly with 2-year yields now up to 1.52% from around 1.44% earlier. Likewise, 10-year yields are up to 1.94% from around 1.86% at the start of the session.
In the commodities space, gold was marked down from $1,910 to $1,895 while oil's surge was also tempered with as Brent crude posted a high of $99.50 only to fall back to near $98 currently. Alas, no triple digit oil prices just yet.
Elsewhere, FX largely shrugged off the pessimism as the aussie and kiwi just built on earlier gains with AUD/JPY running up from 82.80 to 83.15 and testing key daily trendline resistance once again. EUR/USD crept up from 1.1290 to 1.1350 while USD/JPY also moved higher from 112.70 to 115.10 on the session.
It's all about Russia-Ukraine developments still but market participants are showing some positive risk appetite as we look to get this over and done with.
