Daily Market Update Mar 30

Russia made a pledge to scale back its military operations around Kyiv in the ongoing peace talks in Istanbul. Equities rallied on the back of this (particularly Europe) and all safe havens were lower on the day. Skepticism was still high though with most parties warning of a mere regrouping and not a lasting ceasefire. Zelensky said there were some positive signs in a broad atmosphere of cautious optimism.

European nations are still expelling Russian diplomats and the US is reportedly considering another USD 500 mn in military aid to Ukraine. The US was reportedly targeting the Russian military supply chain with sanctions as well, to make it tougher to boost capability by limiting key inputs.

The SPX had another day of all sectors in the green except Energy, as Crude traded mostly sideways on the news. The FX markets saw the most volatility with the US dollar falling and the JPY coming off 6-year lows.

Yield curve watchers would have seen the US 2Y yield pull closer to the 10Y yield with the spread turning negative (inversion) briefly intraday. The 5Y fell back below the 30Y but is still higher than the 10Y yield, which fell back to the 2.35% mark.

Hawkish expectations remain intact and Wall street is putting out conflicting views on what a sustained yield curve inversion (recession indicator) would mean for stocks and bonds. Inflation is proving as sticky as ever and Friday's NFP is possible to cement the 50 bp hike expectations in May.

Limited data releases on the calendar today with US weekly crude inventories likely the most significant. Headlines around Russian troop's movements and China's Covid lockdown are likely grab attention until NFP on Friday, where 490k jobs are expected to have been added in March with the unemployment rate dipping from 3.8% to 3.7%.

Have a great day ahead

“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible. After nearly fifty years in this business, I don’t know anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has.”

Jack Bogle