1 Minute Market Rundown – 30th March 2022
Russia – Ukraine de-escalation?
Asian Stocks higher
Crypto consolidates
Risk continues to trade firm overnight and this morning as the market begins to see the path of least resistance as a de-escalation in geopolitical risks from the Ukraine invasion. It would take a brave person to say we are completely out of the woods but it is another bow to the ‘we have seen the bottom in risk’ arrow.
Cetereus paribus, you would expect yields to rally in times of positive risk sentiment. However, we are currently in an environment where we are seeing the opposite as people have priced in an aggressive FED. Overnight, as risk bounced – higher stocks and lower oil – people re-price the hawkishness of the FED which leads to bonds rallying and lower yields. One thing to note is that the 2s10s curve did briefly invert yesterday. This part of the curve attracts attention as its inversion usually occurs 18 months before a recession. As we mentioned yesterday, this time could be different and the market is also behaving if that is the case. Bond giants Pimco also said the same overnight as the amount of stimulus needs also to be taken into account.
Crypto feels like it’s consolidating for now, albeit at higher levels. Gut instinct is saying we now trade $45k-$50k in BTC in the absence of anything earth shattering. Volumes continue to be depressed so it is tough to see an aggressive move higher. If risk sentiment continues to pick up and global assets tick higher we may just see a slow grind, in the majors at least. The alts seem to be enjoying this environment much more with WAVES, RUNE and AAVE all up as much as 20% over the past 24 hours. Terra has put in an ATH just shy of 110. We continue to stay long and will look to add on dips. The topside levels now are $50k and $3500 in BTC and ETH respectively.
FX was a game of two halves yesterday. Vale date month end saw USD selling across the board before the greenback recovered post the 4pm fix. In line with the improvement in risk sentiment, the USD remains once again on the backfoot. We have questioned previously about how much further yields can rally and if there is a de-escalation in Russia-Ukraine there is a lot of room for yields to come off and thus keeping the USD under pressure. USD/JPY continues to come under pressure following the Yen ‘capitulation’ seen a couple of days ago this is despite the BoJ announcement of further bond buying to curb any upward move in yields.
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