The stock market opened better,
the interest rate markets are little changed from yesterday. There
are no economic reports today. Without anything more important today markets
are focused on the escalation of tensions between the West and Russia.
Yesterday the President added more sanctions, more symbolic than impacting;
freezing more Russian bank accounts and visas; Putin immediately did the same
for some US politicians and business leaders, keeping them from going to
Russia. Tit for tat as the WSJ described it. So far the sanctions and harsh
words from the US and Europe have no real effect.
Markets will continue to be uneasy
over the situation with Russia but so far there is no noticeable market
response to all the tough talk because most don’t take it as seriously as the
Administration and Europe’s leaders do. The stock
market continues to move higher, the Treasury market (MBSs) holding well in the
face of Yellen’s comments earlier this week. The 10 continues to resist moving
above 2.80% a very critical level for long term rates. Investors still taking
out insurance policies against the remote possibility that the Russia situation
might escalate to some form of military consequence between Ukraine and Russian
troops. Given that when the initial mess began the 10 yr fell to 2.62% for a
day and is now back to levels that are the highest yield since the end of
January, the fear factor is quite small. President Vladimir Putin says Russia
should refrain from further retaliation against the U.S. in response to
sanctions targeting members of his inner circle after Crimea's annexation.
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