Ukraine Declares a State of Emergency, Risk Assets Plummet

Ukraine declares a state of emergency, US and Europe impose sanctions on Russia. The conflict in Eastern Europe was the center stage for financial markets yet again today, with risk assets plummeting across the globe. Within US equities, the tech-heavy Nasdaq experienced the largest decline, falling more than 2.5% to its lowest level since May 2020. Oil prices remained volatile amid the escalating conflict – WTI crude whipsawing within a 4% range on the day before ultimately settling 0.20% higher. UST yields/swap rates continued their stubborn march higher, the long end of the curve rising ~4bps as the 10yr yield finished just under 2.00%.

San Francisco Fed President Daly believes “that inflation is too high and the policy rate is too low.” To curb rising inflation levels, Daly believes at least four rate hikes this year will be necessary. Her comments were notably more hawkish than her previous support for a less aggressive policy change.

Day ahead. Tomorrow, initial jobless claims and GDP data will be the highlight of data releases.  Multiple Fed speakers are also scheduled throughout the day, and many will likely provide their thoughts on the current high levels of inflation.