Kristal Daily Market Update Mar 15

US equities overnight reversed gains seen in Europe earlier in the session. Declines here were led by the Energy sector, which fell 3% on the day following WTI dipping below the 100 mark once again after trading north of 120 just last week.

Sectors like Financials are doing well in the run-up to the Fed hiking rates while Consumer Discretionary names continue to feel the pinch from rising inflation. US yields show no signs of slowing their uptrend, with the 30Y touching the 2.5% mark now as we saw the curve move another leg higher overnight.

Yields on Fixed Income ETFs are hitting levels not seen for many years now - LQD at close to 4%, EMB at close to 7% and HYG north of 6% are likely to start attracting flows soon at these levels.

Unfortunately, nothing much has changed on the Ukraine front. The US headline that Russia had requested China for military assistance (denied by both parties of course) did sour sentiment a little more, indicating a higher possibility of a long drawn-out conflict. That being said, peace talks over the weekend between Russia and Ukraine reportedly went better than expected and Ukrainian civilians were finally able to evacuate affected areas via humanitarian corridors after trying in vain for the last couple of weeks.

Russia has also temporarily banned exports of sugar, wheat, and other grains. Over in Asia, North Korea has likely broken its self-imposed moratorium on ICBM (intercontinental ballistic missile) testing with its last two launches - more details are expected to be unveiled at the upcoming military parade there.

El Salvador is back in the news for its pro-crypto stance. Already the first county in the world to declare bitcoin legal tender, it will now look to issue the world's first crypto bond - at USD 1 bn over 10Y, half the proceeds will be used to buy more Bitcoin and half to build 'Bitcoin City', a growing hub for miners in the country. Not everyone is pleased with the development though, as the IMF has reportedly pulled back from negotiations for a USD 1.3 bn loan and adoption of crypto for daily use in the country still remains low.

In price action, the 38k support level for Bitcoin has continued to hold for now. Not much on the economic calendar ahead today outside of Germany's sentiment index, which is expected to take a big hit following the situation in Ukraine.

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