Macroeconomic/ geopolitical developments
- The markets were dominated last week with shifts between “risk on” then “risk off” themes with conflicting reports regarding the potential for conflict starting between Russia and Ukraine.
- Reports of Russian troops withdrawing saw a “risk on” move earlier in the week, which was dismissed by Western statements regarding a potentially imminent invasion, flipping to a “risk off” tone to end the week.
- This has side-tracked the financial markets from their prior focus on inflation and central banks, notably the US Fed.
- However, ongoing hawkish comments from FOMC members continues to concern markets too.
Global financial market developments
- Global stock averages were extremely erratic last week but concerns over the possible conflict between Russia and Ukraine, saw a negative weekly close, led lower by the US indices and once more the tech sector.
- Higher yield pressures abated last week, with US Treasury yields correcting back lower from multi-year highs, with a global safe-haven bond rally, driven by the Russia/ Ukraine worries.
- The US Dollar tried to rally, again with a safe-haven bid.
- Gold surged, even with a slightly firmer US Dollar, as both a safe-haven and inflation hedge.
- Oil has setback from a multi-year high, completing a topping pattern and looking for a deeper correction
- Copper has again tried to reinforce the prior upside breakout effort, retaining a positive bias in broader range.
Key this week
- Geopolitical focus:
- Closely watching for military developments on the Ukrainian/ Russian border.
- The US President’s Day holiday is on Monday 21st February, US markets closed
- Central Bank Watch: The Reserve Bank of New Zealand (RBNZ) interest rate decision, statement and press conference is on Wednesday.
- Macroeconomic data: The global Markit Flash PMI, German IFO, plus US Consumer Confidence, GDP, Personal Consumption Expenditure (PCE) and Durable Goods are the standout data points for the week.
|Date||Key Macroeconomic Events|
|21/02/22||US President’s Day holiday, US markets closed. Global Markit Flash PMI|
|22/02/22||German IFO; US Markit Flash PMI; US Consumer Confidence|
|23/02/22||RBNZ interest rate decision, statement and press conference|
|24/02/22||US GDP and PCE|
|25/02/22||German GDP; US Durable Goods|