Wall Street Worries as Russia Holds at Border with Ukraine
Global oil prices rose overnight to $95 a barrel, triggering a flight from riskier assets into the safe-haven of the U.S. dollar and the Treasury bond market.
Investors followed warnings from the White House that Russia may be planning an invasion of Ukraine as early as this week by selling equities futures and buying Treasury bonds. Oil prices re-asserted their recent seven-year highs, and Treasury bond prices also rose.
According to the Wall Street Journal, following reports that Russia's foreign minister, Sergei Lavrov, pushed President Vladimir Putin on Monday to maintain dialogue with western countries, those losses were trimmed in pre-market trade.
"We can't pinpoint the exact day, but we've been saying for a long time that we're in the window and that a big military operation by Russia in Ukraine could begin any day now," Sullivan said on CNN Sunday. "That includes the next week, which will take place before the conclusion of the Olympics."
The threat of a military conflict on Europe's southern border, as well as the disruption of natural gas supplies to Germany and other European countries, pushed global oil prices above $95 per barrel in overnight trading, prompting a flight from risky assets to the safe-haven of the United States dollar and the Treasury bond market.
WTI oil futures for March delivery, which are closely tied to the price of natural gas in the United States, were marked 79 cents down in early New York trade from their Friday finish of $92.31 per barrel. Brent crude oil futures for April, the global benchmark, were trading 74 cents down at $93.67 a barrel at the time of writing.
The publication of a new $33.3 billion bond-buying schedule that will last into early March, which analysts believe is incompatible with interest rate increases, has prompted investors to reduce their expectations for a 50 basis point rate hike next month, and indeed for any Federal Reserve action before its scheduled meeting on March 15 to March 16.
On Wall Street, futures for the Dow Jones Industrial Average are pricing in a tiny 30 point increase at the opening bell, while futures for the S& P 500 are pricing in a 3 point gain.
According to Nasdaq, the Nasdaq Composite futures show a 10 point gain for the technology-focused benchmark as 10-year Treasury note rates fall to 1.922 percent in early New York trade.
As corporate earnings and economic data releases are light this week, investors are likely to be focused on the strength of the U.S. consumer and the impact of the fastest inflation in more than 40 years on retail spending, as evidenced by Walmart WMT's holiday quarter update and the Commerce Department's report on January retail sales.
Street projections predict that retail sales will increase 1.8 percent from last year when data is released on Wednesday, as consumers recover from a dismal December month in which sales declined 1.9 percent.