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Stocks and Futures Fall, Bonds Surge on Ukraine: Markets Wrap

By Robert Brand

 Stocks fell as investors assessed the risks to the global economic outlook amid geopolitical uncertainties. Treasuries climbed, with traders abandoning their bets on a half-point Federal Reserve hike this month.

The headquarters of Bank Rossii, Russia’s central bank, in Moscow, Russia, on Monday, Feb. 28, 2022. The Bank of Russia acted quickly to shield the nation’s $1.5 trillion economy from sweeping sanctions that hit key banks, pushed the ruble to a record low and left President Vladimir Putin unable to access much of his war chest of more than $640 billion. Photographer: Andrey Rudakov/Bloomberg

The S&P 500 dropped for a second day amid losses in financial and industrial shares, while the technology-heavy Nasdaq 100 advanced. Bonds rallied across the curve, led by short-dated tenors, with swaps linked to the Fed’s March 16 meeting pricing in 24.5 basis points of tightening. Traders are having to pay the most since the March 2020 liquidity crisis to protect against a deeper drop in Treasury yields. Demand continued to rise for option structures hedging potential scenarios where 10-year yields slip to as low as 1.55% by the end of March — about 20 basis points below current levels. Oil jumped.


  • “We are wrestling with the news cycle, and how prolonged hostilities in Ukraine would slow economic growth,” said Larry Weiss, head of equity trading at Instinet. “The spillover effects on the U.S. could cause an economic slowdown. Ironically, there’s thoughts that this slowdown would be cause for less hawkish moves by the Fed, which is, for now, perceived as an encouraging sign for U.S. markets.”
  • “While most now expect the Fed to raise rates by just 25 basis points next month, a hotter-than-expected jobs report on Friday could increase odds for a 50-basis point move,” said Anthony Saglimbene, global market strategist at Ameriprise. “Regardless, we believe most in the Fed prefer to raise interest rates gradually.”
  • Given the heightened uncertainty surrounding Ukraine, a half-point Fed hike “would simply be too aggressive at the moment,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman.

As penalties against Russia continued, the European Union identified seven Russian banks it’s considering excluding from the SWIFT messaging system. The nation banned residents from transferring hard currency abroad as President Vladimir Putin sought to counter the fresh sanctions walloping the economy. The European Union and Switzerland approved measures against some of Russia’s wealthiest tycoons, and Britain told ports not to service Russian-flagged vessels.

President Joe Biden delivers his State of the Union speech at 9 p.m. in Washington. Not since 2003, when George W. Bush laid out his case for war against Iraq, or 2010, when Barack Obama was confronting the financial crisis, has a U.S. leader delivered his annual address to Congress in such a fraught moment.

U.S. equities are off to another rocky start this year as prospects for higher interest rates and Russia’s invasion of Ukraine combine to put the “stocks-only-go-up” mantra to the test. The S&P 500 saw back-to-back monthly declines for the first time in almost a year and a half, bringing its losses this year to 8.2%, its worst start since the pandemic roiled markets to begin 2020. One ray of hope for investors: Each of the last four times the S&P 500 closed lower through February, it finished the year higher by at least 9.5%.

What to watch this week:

  • Fed Chair Jerome Powell testifies to Congress on monetary policy, Wednesday and Thursday
  • OPEC+ meeting, Wednesday
  • Eurozone CPI, Wednesday
  • Bank of Canada rate decision, Wednesday
  • ECB publishes the account of its February meeting, Thursday
  • U.S. unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:


  • The S&P 500 fell 0.4% as of 10:26 a.m. New York time
  • The Nasdaq 100 rose 0.2%
  • The Dow Jones Industrial Average fell 0.9%
  • The Stoxx Europe 600 fell 1.3%
  • The MSCI World index fell 0.4%


  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.7% to $1.1142
  • The British pound fell 0.4% to $1.3373
  • The Japanese yen rose 0.1% to 114.85 per dollar


  • The yield on 10-year Treasuries declined eight basis points to 1.74%
  • Germany’s 10-year yield declined 17 basis points to -0.04%
  • Britain’s 10-year yield declined 22 basis points to 1.19%


  • West Texas Intermediate crude rose 6.8% to $102.24 a barrel
  • Gold futures rose 1.2% to $1,922.90 an ounce

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